Stock Market Today: Stocks fall as U.S. Treasury yields weaken Santa Claus rally

U.S. stock futures were lower in early trading on Thursday, while U.S. Treasury yields remained elevated after the Federal Reserve’s cautious stance on interest rates, with investors pausing an early Santa Claus rally.

So far this year, stocks have rallied strongly over the holidays, with the S&P 500 up 1.1% in the shortened trading day leading up to Christmas, big tech stocks making huge gains, and Apple approaching a $4 trillion valuation (AAPL) offsetting another move higher in U.S. Treasury yields, which could determine markets in the year ahead.

The benchmark 10-year Treasury note traded overnight at 4.613%, up about 42 basis points from December and about 3.5 times the S&P 500 dividend yield of 1.32%.

Short-term yields are also rising, with the 2-year Treasury yield currently at 4.347%, about 20 basis points higher than at the end of November, as traders expect the Fed to cut interest rates less in 2025 and recalibrate its economic outlook for 2025. Growth and inflation forecasts.

Related: Fed rate cut bets tied to Trump policy wildcard in 2025

Meanwhile, Wall Street is looking to pare some of its early-week gains in today’s trading, although trading volumes are traditionally thin given this year’s Christmas holiday and the eight-day Hanukkah holiday that begins on Wednesday.

Futures contracts tied to the S&P 500 opened down 32 points, while futures contracts tied to the Dow Jones Industrial Average opened down 238 points.

The tech-heavy Nasdaq fell 133 points, with Tesla (Tesla) NVIDIA (NVDA) Palantir (PLTR) Early pre-market trading was brisk.

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In Europe, several major markets remained closed for the post-Christmas holiday period, including Boxing Day in the United Kingdom, limiting moves in blue-chip benchmarks.

Frankfurt’s Stoxx 600 index rose 0.32%.

Overnight in Asia, Japan’s Nikkei 225 index rose 1.12% in Tokyo after Bank of Japan Governor Kazuo Ueda made dovish comments on raising interest rates yesterday. Meanwhile, the MSCI ex-Japan regional benchmark edged down 0.08% at the close.

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