Wall Street Today: US stocks extend holiday-thin trading dragged by Nvidia, set for 1% weekly gain; S&P up 25% YTD

Stocks fell in morning trading Friday as Wall Street closes out a holiday-shortened week.

The S&P 500 fell 1.4%, with more than 80% of stocks in the benchmark index losing ground. Still, the index is managing to hold onto a modest gain for the week.

The Dow Jones Industrial Average fell 402 points, or 0.9%, to 42,945 as of 10:41 a.m. Eastern time. The Nasdaq composite fell 2%. Both the Dow and the Nasdaq are also holding on to weekly gains.

Technology stocks were the biggest drag on the market Friday. Semiconductor giant Nvidia slumped 3.2%. Its enormous valuation gives it an outsize influence on indexes. Other Big Tech stocks losing ground included Microsoft, with a 2.2% decline.

A wide range of retailers also fell. Amazon fell 2.2% and Best Buy slipped 1.9%. The sector is being closely watched for clues on how it performed during the holiday shopping season.

Energy was the only sector within the S&P 500 rising. It gained 0.5% as crude oil prices rose 0.8%.

Investors don’t have much in the way of corporate or economic updates to review as the market moves closer to another standout annual finish. The S&P 500 is on track for a gain of around 25% in 2024. That would mark a second consecutive yearly gain of more than 20%, the first time that has happened since 1997-1998.

The gains have been driven partly by upbeat economic data showing that consumers continued spending and the labor market remained strong. Inflation, while still high, has also been steadily easing.

A report on Friday showed that sales and inventory estimates for the wholesales trade industry fell 0.2% in November, following a slight gain in October. That weaker-than-expected report follows an update on the labor market Thursday that showed unemployment benefits held steady last week.

In Asia, Japan’s benchmark index surged as the yen remained weak against the dollar. Stocks in South Korea fell after the main opposition party voted to impeach the country’s acting leader.

Markets in Europe gained ground.

Bond yields held relatively steady. The yield on the 10-year Treasury remained at 4.59% from late Thursday. The yield on the two-year Treasury slipped to 4.32% from 4.33% late Thursday.

Wall Street’s main indexes opened lower, dampening an upbeat holiday-shortened week that started out looking like a classic “Santa Claus” rally was unfolding. The benchmark 10-year Treasury yield was up slightly but hovered below a near-eight-month high reached Thursday, while shorter-term Treasury yields eased.

The U.S. dollar was headed for an almost 7% annual gain while Japan’s yen was set for a fourth consecutive year of losses on Friday, as traders anticipated robust U.S. growth, as well as tax cuts, tariffs and deregulation by the incoming administration of President-elect Donald Trump, would make the Federal Reserve cautious on rate-cutting well into 2025.

The Dow Jones Industrial Average was 0.56% lower after the open. The S&P 500 fell 0.65%, leaving Wall Street’s benchmark on course for a 1% weekly gain. The Nasdaq Composite was down 0.79% in early trade.

The Dow is up 14% in 2024, the S&P 500 is up 25% and the tech-heavy Nasdaq is up 30%.

Analysts said stock markets could change direction as investors returned from holiday and reassessed the risks of elevated U.S. inflation under Trump for richly-valued Wall Street equities.

MSCI’s broad global share index was 0.32% lower on Friday to remain 1.07% higher for the week.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.12%, marking a 1.5% weekly rise, while Tokyo’s Nikkei rose 1.8%.

Europe’s Stoxx 600 was 0.27% firmer on Friday and 0.7% higher for the week.

The dollar index, which measures the currency against six other major currencies, eased 0.09%, looking at a small weekly gain, and to close 2024 with a more than six percent year-on-year gain.

Dollar/yen was down 0.15%, but near levels last seen in July, while the greenback was also showing a 5.3% gain this month against the yen and a near 12% advance for 2024 against the weakened Japanese currency. The euro , up 0.09%, stayed close to two-year lows

Fed Chair Jerome Powell said earlier this month that U.S. central bank officials “are going to be cautious about further cuts” after an as-expected quarter-point rate reduction.

The U.S. economy also faces the impact of Donald Trump, who has proposed deregulation, tax cuts, tariff hikes and tighter immigration policies that economists view as both pro-growth and inflationary.

Traders, meanwhile, anticipate the Bank of Japan will keep its monetary policy settings loose and the European Central Bank will deliver further rate cuts.

Traders are pricing in 37 bps of U.S. rate cuts in 2025, with no reduction fully priced into money markets until June, by which time the ECB is expected to have lowered its deposit rate by a full percentage point to 2% as the euro zone economy slows.

Higher U.S. rate expectations pulled the 10-year Treasury yield, which rises as the price of the fixed income security falls, to its highest since early May early on Thursday, at 4.641%. It was last up 1.4 basis points at 4.595%.

The two-year Treasury yield, which tracks interest rate forecasts, traded around 4.32% off 1.2 bp since late Thursday. U.S. debt trends also sent euro zone yields higher, with Germany’s benchmark 10-year bund yield rising 4.8 bp to 2.372% on Friday.

Elsewhere in markets, gold prices dipped 0.84% to $2,612.20 per ounce, set for about a 27% rise for the year and the strongest yearly performance since 2011 as geopolitical and inflation concerns boosted the haven asset.

Oil prices were also set for a weekly rise as investors awaited news of economic stimulus efforts in China, the world’s biggest crude importer. Brent crude futures rose 1% on the day to $73.99 a barrel, 1.5% higher for the week.