Tech Downturn and Commodity Volatility Pressure Equities as Year Winds Down

U.S. stock markets retreated today, with the S&P 500 falling -0.24%, the Dow Jones Industrials declining -0.09%, and the Nasdaq 100 sinking -0.24%. Futures markets echoed the weakness, as March E-mini S&P contracts dropped -0.28% and March E-mini Nasdaq futures fell -0.27%.

Large-Cap Technology Weakness Leads Market Decline

The primary catalyst for today’s equity weakness originated from the technology sector. The Magnificent Seven stocks—including Nvidia (down over -1%), Tesla (falling more than -1%), Meta Platforms (declining -0.83%), Amazon.com (off -0.37%), Alphabet (down -0.32%), Microsoft (falling -0.24%), and Apple (sliding -0.07%)—collectively exerted downward pressure on the broader indexes.

Precious Metals Take Flight Then Reverse

Precious metals experienced a dramatic reversal today. Silver and platinum initially reached fresh record highs but subsequently collapsed under profit-taking pressure. The sharp decline in silver prices exceeded -8%, while gold retreated more than -4%. The CME’s decision to raise margin requirements for precious metals trading intensified long liquidation activity, compounding the selloff. This commodity weakness rippled through the mining sector, with Newmont tumbling over -6%, Hecla Mining dropping more than -5%, Coeur Mining declining over -4%, and Freeport-McMoRan retreating more than -2%.

Energy Sector Stands Resilient Amid Geopolitical Backdrop

In contrast, crude oil rose more than +2%, providing lift to energy producers. Weekend peace negotiations between major powers failed to produce results, while tensions in Venezuela and Nigeria supported oil demand. Additionally, China’s announcement regarding expanded fiscal spending next year bolstered energy prices. Devon Energy climbed more than +2%, Diamondback Energy gained over +1%, Chevron advanced more than +1%, and Exxon Mobil, Valero Energy, and Occidental Petroleum all posted gains exceeding +1%.

Treasury Markets Benefit from Risk-Off Sentiment

The 10-year T-note yield declined -0.8 basis points to 4.120%, touching a 1-week low of 4.102%. Safe-haven demand drove T-note purchasing as investors reassessed risk amid market weakness and geopolitical uncertainties. March 10-year T-note futures climbed by +2 ticks.

European government bonds also advanced, with the 10-year German bund yield falling -3.5 basis points to 2.826% (a 3-week low of 2.824%), and the 10-year UK gilt yield declining -1.9 basis points to 4.488% (a 1-week low of 4.459%).

Economic Data Delivers Mixed Signals

November pending home sales surprised to the upside, rising 3.3% month-over-month versus expectations of 0.9% growth. However, the December Dallas Fed manufacturing gauge for general business activity unexpectedly deteriorated to -10.9 from -0.5, falling well short of forecasts for improvement to -6.0.

The week ahead will focus on economic data releases. Tuesday brings the December MNI Chicago PMI (anticipated to rise +3.5 points to 39.8) and the December 9-10 FOMC meeting minutes. Wednesday’s initial weekly unemployment claims are expected to rise by 1,000 to 215,000. Friday will see the December S&P manufacturing PMI expected to hold at 51.8.

Individual Stock Highlights

Praxis Precision Medicine surged over +14% following FDA breakthrough therapy designation for its ulixacaltamide treatment for essential tremor. DigitalBridge Group climbed over +9% after SoftBank Group agreed to acquire it for approximately $4 billion ($16 per share). Verisk Analytics gained more than +1% after terminating its AccuLynx acquisition agreement. Coupang advanced over +1% after committing to provide compensation exceeding $1 billion to customers affected by a data breach.

Global Markets Paint Varied Picture

Overseas exchanges showed mixed results. Europe’s Euro Stoxx 50 rose +0.14%, while China’s Shanghai Composite climbed to a 6-week high and closed up +0.04% for its ninth consecutive daily gain. Japan’s Nikkei Stock 225, however, fell -0.44%.

Markets currently price in a 19% probability of a -25 basis point rate cut at the FOMC’s next meeting on January 27-28. The ECB, meanwhile, faces zero odds of a +25 basis point rate hike at its February 5 policy decision according to swap pricing.