Stocks Slide as Investors Weigh Recession Risks

The stock market kicked off the week with a negative tone after a rough start to December. Earnings concerns driven by recession concerns continue to weigh on sentiment, along with a poor performance from the mega cap stocks, a noticeable move higher in Treasury yields, and reports of rebalancing activity.

The 2-yr note yield is up five basis points to 4.25% and the 10-yr note yield is up 11 basis points to 3.59%.

The Vanguard Mega Cap Growth ETF (MGK) is down 1.1% versus a 0.5% loss in the S&P 500 and a 0.4% loss in the Invesco S&P 500 Equal Weight ETF (RSP).

Meta Platforms (META) is among the weakest mega cap performers on a report that the European Commission believes Meta breached its antitrust rules. Tesla (TSLA), meanwhile, has been volatile. It currently trades in positive territory despite duel concerns about weakening demand and Elon Musk’s Twitter involvement.

S&P 500 sector performance also reflects the drag that mega cap stocks have had on the broader market. The communication services (-1.3%), consumer discretionary (-1.1%), and information technology (-1.1%) sectors show the steepest losses for the 11 sectors. The energy (+0.3%) and consumer staples (+0.2%) sectors sit atop the leaderboard.

Rising oil prices are boosting the energy sector. WTI crude oil futures are up 1.7% to $75.71/bbl.

On a related note, European Union energy ministers agreed on a price cap for natural gas of 180€/MWh. Natural gas futures are down 10.5% to $5.91/bbl.

Economic data today was limited to the NAHB Housing Market Index, which fell to 31 in December (Briefing.com consensus 34) from 33 in November.