Nasdaq and S&P 500 Slip as Nvidia, Meta Fall; Tesla and Financials Shine

Wall Street Mixed as Softer Producer Price Data Offers Modest Relief

Wall Street’s major indexes closed mixed on Tuesday, with the Dow gaining while the S&P 500 and Nasdaq fell. Investors welcomed weaker-than-expected producer price data but grappled with the implications for Federal Reserve policy, as Treasury yields remained near recent highs.

The Labor Department reported a 3.3% annual increase in the producer price index (PPI) for December, slightly below the 3.4% consensus estimate. On a monthly basis, prices rose 0.2%, signaling easing inflationary pressures. However, the benchmark 10-year Treasury yield remained elevated at 4.79%, keeping growth-focused equities under pressure.

How Are Tech Stocks Pressuring the Market?

Big tech stocks were a drag on the S&P 500 and Nasdaq. Nvidia and Meta Platforms slid around 2%, while Alphabet and Microsoft posted marginal losses of 0.1%. The weakness in these heavyweights offset gains in Tesla and Palantir, which rose 1% and 2%, respectively.

The healthcare sector also struggled, declining 1.3% as Eli Lilly tumbled 8.2% following a disappointing sales outlook for a key weight-loss drug. Energy stocks slipped as oil prices softened, further weighing on market sentiment.

Where Did Strength Emerge?

Consumer discretionary stocks led the day’s gains, bolstered by Tesla’s strong performance. Small-cap stocks also fared well, with the Russell 2000 index advancing 1%. Financials edged higher, with the S&P banking index climbing 0.5% as traders looked ahead to major bank earnings reports later this week.

Bitcoin’s resurgence above $97,000 added to the day’s bright spots, lifting cryptocurrency-related stocks. MicroStrategy jumped 6%, while Coinbase and Riot Platforms gained 3.7% and 5.6%, respectively.

What Are Traders Expecting from the Fed?

Fed funds futures indicated that traders are pricing in 29 basis points of rate cuts by the end of 2025, down from earlier projections of 50 basis points. The central bank’s next meeting on January 28–29 is expected to result in a rate hold. Fed officials’ comments later Tuesday could provide additional clues about policy direction.

What’s Ahead for Markets?

Attention now shifts to Wednesday’s consumer price index (CPI) report, which will shed more light on inflation trends. Additionally, earnings from JPMorgan Chase, Citigroup, and Goldman Sachs on Wednesday will serve as a bellwether for the financial sector’s strength.

While the softer producer price data offered some relief, the pullback in tech stocks and lingering inflation concerns suggest volatility could persist as markets continue to assess the economic outlook and the Fed’s next moves.

More Information in our Economic Calendar.