NEW YORK – The Nasdaq fell on Monday, while the benchmark S&P 500 bounced off a two-month low and eked out a slight gain as U.S. Treasury yields stayed elevated with investors dialing back expectations on the pace of rate cuts from the Federal Reserve.
Recent economic data have indicated a resilient economy with nagging price pressures, which has pressured equities. Comments from Fed officials have pushed bond yields higher. The S&P 500 had weekly losses in four of the last five weeks.
Promised tariffs from President-elect Donald Trump have also fueled worries about inflation.
Treasury yields edged higher, with the benchmark 10-year note yield touching a 14-month high of 4.805% and last up 1.6 basis points to 4.79%.
Markets are pricing in about 27 basis points of cuts from the Fed this year, with a 52.9% chance for a June cut.
“There’s concern that we’re going to see higher inflation numbers. I’m not so sure that’s positively the case, but that’s sort of the concern here and that it’s going to be a while before we see lower rates again,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.
“The inflation issue is out there and higher yields in general aren’t great for either the bond market or really the stock market. You do have out there as well, January 21st coming up, and you know and we’ll see what the new administration does.”
The Dow Jones Industrial Average rose 358.67 points, or 0.86%, to 42,297.12, the S&P 500 gained 9.18 points, or 0.16%, to 5,836.22 and the Nasdaq Composite lost 73.53 points, or 0.38%, to 19,088.10.
The Dow was buoyed by a 3.93% gain in UnitedHealth Group (NYSE: UNH) after President Joe Biden’s administration proposed 2026 reimbursement rates for Medicare Advantage plans run by private insurers, which would result in a 2.2% increase in payments.
CVS Health (NYSE: CVS) and Humana (NYSE: HUM) jumped about 7% as the S&P 500 healthcare sector rose 1.27%.
Utilities and tech led decliners. Edison International (NYSE: EIX) tumbled more than 11.89% after Bloomberg News reported the southern California utility was hit with a lawsuit blaming the company’s equipment for igniting one of the wildfires consuming parts of the state.
Energy climbed 2.25%, the biggest daily gain of the 11 major S&P sectors, as crude prices kept rising on expectations that tougher U.S. sanctions on Russian oil would force buyers in India and China to other suppliers.
The Consumer Price Index (CPI) numbers and the central bank’s Beige Book on economic activity, both due on Wednesday, will likely help shape views on the Fed’s policy outlook.
Chip stocks slipped, with Nvidia (NASDAQ: NVDA) down 1.97% and Micron Technology (NASDAQ: MU) off 4.31% after the U.S. government said it would further restrict artificial intelligence chip and technology exports. The PHLX semiconductor index was lower.
Moderna (NASDAQ: MRNA) plummeted 16.8% as the biggest decliner on the S&P 500 after slashing its 2025 sales forecast by $1 billion.
Declining issues outnumbered advancers by a 1.02-to-1 ratio on the NYSE and by a 1.4-to-1 ratio on the Nasdaq.
The S&P 500 posted three new 52-week highs and 23 new lows, while the Nasdaq Composite recorded 23 new highs and 252 new lows.
Volume on U.S. exchanges was 14.88 billion shares, compared with the 15.73 billion average for the full session over the last 20 trading days.
