Nasdaq 100: Amazon, Meta Drop as Rising Yields and Crypto Sell-Off Hit Tech Stocks

Wall Street Pulls Back as Rising Yields Cap Gains

U.S. equity markets traded lower Thursday as rising Treasury yields overshadowed light holiday trading. Major indexes struggled to build momentum despite seasonal optimism surrounding a potential Santa Claus rally.

Indexes Slip as Treasury Yields Climb

The S&P 500 edged lower, dragged down by weakness in consumer discretionary stocks, while the Nasdaq Composite also saw declines, led by tech underperformance. The Dow Jones Industrial Average held relatively flat, reflecting investor hesitation. Treasury yields continued their December climb, with the 10-year Treasury note rising 5 basis points to 4.64%—its highest level since May.

The overall market has faced headwinds after rallying through November. Although equities are still near record highs, upward pressure on yields threatens to curb further gains, especially in growth-oriented sectors.

Consumer Discretionary Leads Sector Losses

Sector performance was broadly negative, with consumer discretionary stocks underperforming. The sector dropped 0.5%, marking the sharpest decline among S&P 500 groups. Tech and communications also saw losses, reflecting sensitivity to higher rates.

Crypto-related stocks were hit hard as digital assets retreated post-holiday. MicroStrategy fell 4%, and Coinbase slipped 2.2%, tracking declines in underlying cryptocurrencies. Bitcoin’s pullback weighed heavily on sentiment, spilling over into equity proxies.

Amazon, Meta Lead Megacap Weakness

Individual stocks struggled to find footing. Amazon dropped 0.8%, while Meta Platforms slid 1%, contributing to the Nasdaq’s broader decline. Investors appeared cautious about megacap tech’s ability to sustain gains with Treasury yields rising.

Bitcoin-tracking ETFs underperformed. The iShares Bitcoin Trust sank 2.9%, while the iShares Ethereum Trust dropped 4.6%, reflecting digital asset volatility. Bitcoin itself fell 2.6%, signaling profit-taking and holiday-season liquidity concerns.

Crypto and Bitcoin ETFs Decline Post-Holiday

 

The cryptocurrency market experienced a holiday hangover, with Bitcoin sliding after Christmas. Crypto ETFs, which didn’t trade during the holiday, caught up to the downward move on Thursday. Weakness in Bitcoin and Ethereum reverberated across digital-asset-linked equities, dragging down related sectors.

Labor Data Reflects Cooling, but Steady Job Market

Economic data added to the mixed sentiment. Weekly jobless claims totaled 219,000, slightly below forecasts, while continuing claims rose to 1.91 million—the highest since November 2021. This points to a labor market that remains resilient but may be gradually softening.

While the data supports the case for potential rate cuts in 2025, the Federal Reserve’s scaled-back projections for next year’s cuts have tempered expectations. Investors now anticipate just two rate reductions, down from the four previously indicated.

Where Markets Could Head Next

The market outlook hinges on bond yields and economic data in the coming weeks. If Treasury yields continue rising, equities—particularly growth stocks—face the risk of further declines. However, the potential for a Santa Claus rally driven by seasonal factors could lend near-term support.

Traders should monitor labor data closely for signs of softening, as any deterioration could shift market expectations toward earlier Fed rate cuts. In the short term, yields above 4.6% on the 10-year Treasury remain a key headwind for risk assets.

More Information in our Economic Calendar.