Market Pullback Widens as Tech Stocks Tumble and Bond Yields Rise Higher

Wall Street concluded Wednesday’s session in negative territory, marking the final trading day of the year with broad-based weakness. The S&P 500 slipped -0.74%, while the Nasdaq 100 extended losses to -0.84%, signaling particular pressure on technology and chip-related equities. The Dow Jones Industrials retreated -0.63%, with all three major benchmarks touching 1.5-week lows. March futures contracts reflected the broader selloff, with E-mini S&P futures down -0.71% and E-mini Nasdaq futures declining -0.89%.

What Drove the Decline: Tech Weakness and Yield Headwinds

The selloff centered on two key headwinds for equities. First, semiconductor and data storage companies faced significant selling pressure, with Micron Technology, KLA Corp, and Western Digital each closing more than -2% lower. Broader tech names including Nvidia, Qualcomm, and ARM Holdings also declined by over -1%, weighing on market sentiment.

Second, rising bond yields presented a headwind for growth stocks. The 10-year Treasury note yield climbed +4 basis points to 4.16% following an unexpected drop in weekly jobless claims to a 1-month low of 199,000—a development interpreted as hawkish signaling for Federal Reserve policy. This stronger-than-expected labor market reading (versus forecasts of 218,000 claims) suggested economic resilience but dampened sentiment around lower interest rates.

Mining stocks also retreated amid precious metals weakness, with gold prices sliding to 2.5-week lows and silver plunging more than -9%. Companies like Newmont, Barrick Mining, and Freeport-McMoRan all closed down more than -1%.

The Magnificent Seven: Mixed but Tilted Lower

The mega-cap tech cohort showed resilience relative to the broader market, though not entirely unscathed. Tesla declined -1.04%, Meta Platforms fell -0.88%, and Microsoft slipped -0.79%. Amazon.com, Nvidia, Apple, and Alphabet experienced smaller declines ranging from -0.27% to -0.74%, suggesting selective buying in mega-cap names even as smaller-cap tech faced steeper losses.

Bright Spots Amid Market Headwinds

Not all movers trended lower. Vanda Pharmaceuticals surged more than +25% after FDA approval for its Nereus drug addressing motion-induced vomiting. Nike rallied more than +4% as insider buying signals emerged following CEO Hill’s $1 million share purchase on Monday. Terawulf Inc climbed more than +3% after an upgrade to outperform rating with a $24 price target.

Conversely, Corcept Therapeutics cratered by more than -49% following FDA rejection of its relacorliant drug for hypertension treatment due to insufficient effectiveness data. GlobalFoundries slid more than -3% after Wedbush downgraded the stock.

Global Context: Better Than Expected Chinese Data

While US markets retreated, Chinese economic releases came in stronger than anticipated. The December manufacturing PMI rose +0.9 points to 50.1, representing the fastest expansion pace in 9 months and exceeding forecasts of 49.2. Non-manufacturing PMI similarly topped expectations at 50.2 versus 49.6, suggesting modest momentum in the world’s second-largest economy and supporting global growth narratives.

Looking Ahead: What’s Lower and Higher on the Horizon

Bond market expectations hint at modest Fed rate-cut odds, with swaps pricing just a 15% probability of a -25 basis point cut at the January 27-28 FOMC meeting. European swap markets assign only a 1% chance of a +25 basis point ECB hike at February’s policy session.

Seasonality data offers a constructive backdrop, with Citadel Securities noting that since 1928, the S&P 500 has risen 75% of the time during the final two weeks of December, gaining an average of 1.3%. Friday’s release of December manufacturing PMI—expected to hold steady at 51.8—will command market attention as traders navigate the holiday-shortened week ahead.

Trading volumes remained subdued throughout Wednesday as German and Japanese markets remained closed for New Year observance, limiting transaction flow and likely amplifying intraday volatility moves.