Tech Sector Weakness Drags Down Wall Street as Year Draws to Close

Market sentiment turned decidedly cautious on the final trading day of the year, with major US indices experiencing notable declines driven by softening performance in megacap technology names. The S&P 500 retreated -0.15%, while the Dow Jones Industrial Average fell -0.18% and the Nasdaq 100 dipped -0.19%. Futures markets reflected similar pressure, with March E-mini S&P contracts trading -0.17% lower and March E-mini Nasdaq contracts sliding -0.22% into the close.

The primary culprit behind today’s market weakness stems from a selloff in the Magnificent Seven technology stocks. Meta Platforms dropped -0.64%, Microsoft retreated -0.31%, Amazon.com fell -0.29%, Apple declined -0.24%, and Alphabet dipped -0.20%, with Tesla largely flat at -0.04%. This synchronized weakness among the market’s largest-cap names extended selling pressure across the broader equity market, pushing both the Dow Jones Industrial Average and Nasdaq 100 to their lowest levels in one week and 1.5 weeks respectively.

Economic Data Paints Mixed Picture

Labor market strength inadvertently weighed on sentiment as US weekly initial jobless claims unexpectedly fell to 199,000—a one-month low and 16,000 below prior week levels. Rather than celebrating this resilience, markets interpreted the data as hawkish for Federal Reserve policy, potentially delaying rate cuts that investors have priced in for 2026. The 10-year Treasury note yield climbed 3 basis points to 4.15% following the announcement.

Contrasting the domestic economic picture, Chinese manufacturing activity showed meaningful improvement. The December manufacturing PMI rose to 50.1, marking the fastest expansion pace in nine months and exceeding consensus expectations of 49.2. Similarly, the non-manufacturing PMI climbed to 50.2, surpassing forecasts of 49.6. These readings suggest stabilizing economic growth in the world’s second-largest economy, providing some support to global risk sentiment.

Commodity Weakness and Safe-Haven Demand

Mining and precious metal sectors experienced significant selling pressure today. Gold prices tumbled to a 2.5-week low while silver plummeted more than 8%, reflecting broader risk-off dynamics. Mining equities followed suit, with Newmont, Hecla Mining, and Coeur Mining each sliding more than 1%, while Freeport-McMoRan declined 0.66%.

The weakness in equities paradoxically supported government debt, as investors rotated toward safer assets. March 10-year Treasury note futures declined 6 ticks, with the 10-year yield reaching 4.147%. European government bond yields also moved lower, though German markets remained closed for the New Year’s holiday.

Notable Individual Stock Movements

Nvidia bucked the weakness trend in technology, advancing 0.35% after Reuters reported the chipmaker approached TSMC to accelerate production of its H200 artificial intelligence processors due to stronger-than-expected demand signals from Chinese customers.

On the healthcare front, Corcept Therapeutics collapsed more than 46% after FDA regulators rejected its relacorliant drug candidate for hypertension treatment, citing insufficient effectiveness evidence for a favorable benefit-risk profile. Conversely, Vanda Pharmaceuticals surged more than 24% following FDA approval of its Nereus drug for motion-induced nausea prevention.

In semiconductor-related news, GlobalFoundries dropped more than 2% following a Wedbush downgrade to neutral from outperform. Cryptocurrency-adjacent play Terawulf Inc rallied more than 5% on an analyst upgrade to outperform with a $24 price target.

Nike climbed more than 2% to lead Dow Jones gainers on insider buying signals, as disclosed in an SEC filing showing CEO Hill purchased approximately $1 million in company shares on Monday.

Market Outlook

Trading volumes remained well below normal as markets in Germany and Japan observed New Year’s holidays, creating a holiday-shortened trading week. Looking ahead, attention will focus on December S&P manufacturing PMI on Friday, expected to hold steady at 51.8. Current derivatives markets price in just a 15% probability of a 25 basis point rate cut at the Fed’s January 27-28 policy meeting, suggesting investors remain cautious on rate cut expectations heading into 2026.