Market Correction: Tech Weakness Drags Equities Lower as Economic Signals Shift

Tech stocks are experiencing notable weakness today, with the Magnificent Seven leading a broader pullback across U.S. equity markets. The S&P 500 Index retreated -0.15%, while the Nasdaq 100 declined -0.19%, hitting its lowest point in 1.5 weeks. Meanwhile, the Dow Jones Industrials fell -0.18%, reaching 1-week lows. March E-mini S&P futures decreased -0.17%, and March E-mini Nasdaq futures dropped -0.22%, signaling continued pressure heading into the new year.

Tech Giant Selloff Drives Market Declines

Meta Platforms experienced the sharpest decline among the Magnificent Seven, dropping -0.64%, followed by Microsoft (-0.31%), Amazon.com (-0.29%), Apple (-0.24%), and Alphabet (-0.20%). Tesla contributed to the weakness with a modest -0.04% decline. The concentrated selling pressure in these mega-cap names has created a headwind for the broader market.

Nvidia stood out as an exception to the tech weakness, gaining +0.35% after Reuters reported the company is working with TSMC to accelerate production of its H200 artificial intelligence chips amid stronger demand signals from China. This development provides a rare bright spot in an otherwise challenging session for the technology sector.

Economic Data Sends Mixed Signals

A divergence in economic indicators is adding complexity to today’s market dynamics. U.S. weekly initial jobless claims fell unexpectedly by -16,000 to reach a 1-month low of 199,000, compared to forecasts calling for an increase to 218,000. This labor market resilience is being interpreted as hawkish for Federal Reserve policy, supporting higher interest rates.

The 10-year Treasury note yield climbed +3 basis points to 4.15% in response to the strong jobless claims data. Higher bond yields typically pressure equity valuations, particularly for growth-oriented technology stocks that comprise a large portion of the market indices.

However, developments from overseas painted a more encouraging picture. China’s December manufacturing PMI rose +0.9 points to 50.1, marking the fastest expansion rate in 9 months and exceeding expectations of no change at 49.2. The non-manufacturing PMI also improved, climbing +0.7 to 50.2 versus forecasts of 49.6. These data points suggest stabilization in the world’s second-largest economy.

Commodity and Mining Sector Pressures

Mining stocks are retreating sharply today as precious metal prices decline. Gold prices have fallen to 2.5-week lows, while silver prices have experienced a severe plunge exceeding -8%. This weakness is translating into losses for mining companies, with Newmont, Hecla Mining, and Coeur Mining all declining more than -1%. Freeport-McMoRan, a major copper and gold producer, is down -0.66%.

The retreat in precious metals reflects broader market sentiment shifts, including the impact of rising real interest rates and a stronger labor market narrative.

Individual Stock Movers and Corporate Developments

Beyond the Magnificent Seven weakness, several individual names are commanding investor attention with significant moves.

Corcept Therapeutics experienced a severe decline of more than -46% after the FDA rejected its relacorliant candidate for treating hypertension secondary to hypercortisolism. The regulatory agency determined that additional effectiveness evidence would be necessary before approving a favorable benefit-risk assessment.

On the positive side, Vanda Pharmaceuticals surged more than +24% following FDA approval of its Nereus drug for preventing motion-induced vomiting. Terawulf Inc gained more than +5% after Keefe, Bruyette & Woods upgraded the stock to outperform with a $24 price target, reflecting positive sentiment in the cryptocurrency mining sector.

GlobalFoundries declined more than -2% after Wedbush downgraded the stock to neutral from outperform, citing concerns about the semiconductor equipment landscape. Meanwhile, Nike led Dow Jones gainers with a more than +2% advance, supported by insider buying signals after CEO Hill purchased approximately $1 million in shares on Monday, according to SEC filings.

Interest Rate Environment and Market Technicals

March 10-year Treasury note futures retreated -6 ticks as the bond market grappled with conflicting signals. While strong jobless claims data supports higher rates, equity market weakness is generating some safe-haven demand for government debt. European government bond yields are moving lower, with the 10-year UK gilt yield declining -1.9 basis points to 4.479%.

The derivatives market is pricing only a 15% probability of a -25 basis point rate cut at the Federal Open Market Committee’s next meeting on January 27-28, reflecting expectations of continued Fed restraint.

Market Context and Holiday Factors

Trading volumes are subdued today as markets in Germany and Japan remain closed for New Year’s holiday observances. This reduced liquidity environment may be exacerbating price movements. Seasonal patterns historically favor equities during the final two weeks of December—Citadel Securities data shows the S&P 500 has advanced 75% of the time since 1928, with average gains of 1.3%—though such support appears insufficient to overcome current market weaknesses.

International markets show mixed performance. Europe’s Euro Stoxx 50 retreated -0.08%, while China’s Shanghai Composite finished with a marginal +0.09% gain. Japan’s Nikkei Stock 225 is closed for the bank holiday period.

Looking Ahead

With the year’s final trading day concluding today, market attention will shift to December economic readings in the coming week. The December S&P manufacturing PMI is expected to hold steady at 51.8, providing additional context on domestic economic conditions as the new year begins. The combination of persistent market weaknesses in technology alongside resilient labor market data suggests investors remain cautious about valuation adjustments in the face of a higher rate environment.