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Indexes down: Dow 1.52%, S&P 500 1.51%, Nasdaq 1.66%

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Crypto stocks drop tracking bitcoin's slide

(Updates to market open)

By Johann M Cherian and Pranav Kashyap

Dec 30 (Reuters) -

Wall Street's main stock indexes opened sharply lower on

Monday and hit their lowest in over a week, as sparse trading

volumes and the specter of elevated Treasury yields cast a cloud

over the traditionally strong year-end rally for equities.

At 09:57 a.m. ET, the Dow Jones Industrial Average

fell 651.52 points, or 1.52%, to 42,340.69, the S&P 500

lost 89.52 points, or 1.51%, to 5,881.32 and the Nasdaq

Composite lost 326.47 points, or 1.66%, to 19,397.26.

All 11 S&P 500 sectors fell, with consumer discretionary

leading declines.

Growth stocks such as Tesla and Meta

dropped 3.1% and 2.2%, respectively. Chip company Broadcom ( AVGO )

lost 3.8%, sending the semiconductor index more

than 2% lower.

The weakness was atypical as equities tend to do well in

the last five trading days of December and into the first two

days of January, a phenomenon dubbed the Santa Claus rally. The

S&P 500 has gained 1.3% on average during the period since 1969,

according to the Stock Trader's Almanac.

The benchmark index eked out marginal gains last week, with

analysts pointing to a strong run earlier in the year that sent

valuations soaring. The index has been trading in a bull market

for over two years and is poised to end its second consecutive

year with gains of more than 20%.

However, some analysts expect Trump's policies to be

inflationary, with the yield on the benchmark 10-year note

trading near its highest level since May 2024. On

the day, it dipped to 4.548%.

"If yields continue to hold at these levels... this will be

a strong headwind for equity prices, as investors choose the

relative safety of a near-guaranteed 5% return on funds in U.S.

Treasuries, compared with the uncertainty of stocks, many of

which are trading at or near all-time highs," said David

Morrison, senior market analyst at Trade Nation.

The rise in Treasury yields since early December has

pressured the S&P 500 and the Dow, setting the

indexes on track for their roughest month since April.

After the Federal Reserve struck a cautious tone at its

recent meeting, markets toned down their rate-cut expectations

for 2025. They now expect the first reduction in May next year,

according to the CME Group's FedWatch Tool.

Later in the week, investors will scrutinize the ISM

manufacturing activity survey for December and a weekly report

on jobless claims, ahead of a key employment report due in the

following week.

Shares of Boeing ( BA ) were down 3.5%, the worst performer

on the S&P 500. South Korea ordered an emergency safety

inspection of its entire airline operation system after the

country's worst air disaster over the weekend involving a Boeing ( BA )

plane.

Crypto stocks such as MicroStrategy ( MSTR ) lost 5.3%,

Coinbase dropped 4.9% and MARA Holdings ( MARA )

dropped 5%, tracking a 2.4% slide in bitcoin prices.

Trading is expected to be impacted by thin volumes in the

run up to the New Year holiday on Wednesday and is likely to

remain subdued until Jan. 6.

Declining issues outnumbered advancers by a 4.12-to-1 ratio

on the NYSE and by a 3.94-to-1 ratio on the Nasdaq.

The S&P 500 posted no new 52-week highs and 11 new lows

while the Nasdaq Composite recorded 24 new highs and 66 new

lows.

(Reporting by Johann M Cherian and Pranav Kashyap in Bengaluru;

Editing by Devika Syamnath)