US stocks are mostly falling as interest rate cut forecasts are further scaled back

U.S. stocks mostly fell again on Monday as investors continued to scale back expectations for interest rate cuts from the Federal Reserve after Friday’s strong jobs data suggested a still-strong economy.

The benchmark S&P 500 index hit a two-month low as bond yields jumped on expectations the Fed will keep interest rates higher for longer this year. At around 11 a.m. ET, the broad S&P 500 index fell 0.43%, or 24.89 points, to 5,802.15, the blue-chip Dow rose 0.42%, or 177.76 points, to 42,116.21 and the tech-heavy Nasdaq lost 1.04% or 199.90 points. At 18,961.43. The benchmark 10-year yield was most recently at 4.786%.

Bank of America economists have scaled back their rate cut expectations and now believe a rate hike is the more likely next step. “Inflation is above target and the Fed has cut interest rates primarily to ensure a strong labor market, which has been achieved,” it said in a note. “That means no further cuts are needed,” adding, “They see the risks for the Fed’s next move as more of a rate hike than a cut.”

Chip supplies hit

Chip darling Nvidia and other semiconductor stocks lost ground after President Joe Biden’s administration proposed new restrictions on U.S. chip exports.

To thwart China’s advances in artificial intelligence (AI) and protect national security, the US said it would limit the number of exports of advanced AI chips to certain countries. Eighteen key allies and partners would be exempt, it said.

Companies criticized the framework. Ned Finkle, vice president of government affairs at Nvidia, called the proposal “misguided” and said it “threatens to derail innovation and economic growth worldwide.”

The proposal has a 120-day comment period that would run until the start of President-elect Donald Trump’s term. Trump’s inauguration is January 20th.

Shares of Nvidia fell 3.77% to $130.79 and Intel fell 2% to $18.77.

Oil prices are rising

Oil prices rose for a third straight day, with Brent crude rising above $80 a barrel, hitting its highest level in more than four months, on the back of broader U.S. sanctions on Russian oil, prompting India and China to do so could start buying more oil from the Middle East, Africa and the Americas, driving up prices and shipping costs, analysts said.

On Friday, the U.S. Treasury Department imposed new sanctions on producers including Gazprom Neft and Surgutneftegaz as well as 183 ships that shipped Russian oil, targeting revenue that Moscow has used to finance its war with Ukraine.

Other moving companies

Other stocks with big moves on Monday include:

Moderna cut its 2025 revenue forecast by $1 billion and shares fell more than 21%.
US Steel shares rose after CNBC’s David Faber, citing sources, reported that Cleveland Cliffs and Nucor would work together on a possible takeover bid for the steel giant.
Howard Hughes Holdings, a real estate developer, rose 9% after Bill Ackman’s Pershing Square proposed a deal to merge with the real estate company into a new entity that would offer current holders $85 per share.

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US stocks are mostly falling as interest rate cut forecasts are further scaled back

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