Johann M. Cherian, Sukriti Gupta and Caroline Mandl
(Reuters) – U.S. stocks fell on Tuesday after a string of upbeat economic data raised concerns that a rebound in inflation could slow the pace of the Federal Reserve’s monetary easing.
Stocks gave up early gains after a Labor Department report showed an unexpected increase in job openings in November, while a separate report said activity in the services sector accelerated in December, when metrics tracking input prices rose to a near two-year high. .
“The markets are starting to realize that they thought we were in the eighth inning of fighting inflation, but now it’s going to be higher and longer,” said Joe Mazzola, head of trading and derivatives strategy at the firm. Charles Schwab (New York Stock Exchange:).
The 10-year Treasury yield hit 4.699% after data pointed to a strong economy, its highest since April 26.
“Both of these factors have potentially inflationary implications, and yields have risen as a result,” said Mike Dixon, head of research at Horizon Investments, citing economic data. “It’s definitely putting pressure on stocks.”
Signs of the economy’s continued strength have sidelined expectations about when the central bank might make its first interest rate cut this year. Traders now believe the next rate cut will come in June, with the Fed remaining unchanged through the end of 2025, according to CME (NASDAQ:)’s FedWatch tool.
Investors are also concerned about the impact of possible tariffs from the new Trump administration on consumer prices. “The combination of strong growth and a new wave of inflationary pressures from tariffs means the Fed will likely move from cutting interest rates at every decision… to pausing between rate cuts in 2025,” Bill Adams, chief economist at the American Stock Exchange (NYSE). ). 🙂 Bank, the note says.
Down 178.20 points, or 0.42%, at 42528.36, down 66.35 points, or 1.11%, at 5909.03 and down 375.30 points, or 1.89%, at 19489. 68.
The higher yield sent technology stocks down 2.39%. Shares of artificial intelligence leader Nvidia (NASDAQ:) fell 6.22%.
Most of the 11 S&P 500 sectors fell, with the exception of health care and energy stocks.
The main focus of the week is on key data on non-farm payrolls, as well as the minutes of the December Fed meeting.
In the previous session, the S&P 500 and Nasdaq closed below one-week highs on uncertainty after President-elect Donald Trump denied reports that his team was considering a less aggressive tariff policy.
Tesla (NASDAQ:) shares fell 4% after BofA Global Research downgraded the stock to neutral from buy.
Micron Technology (NASDAQ:) shares rose 2.67% after Nvidia CEO Jensen Huang said the chipmaker is providing memory for Blackwell’s GeForce RTX 50 family of gaming chips, led by the artificial intelligence leader.
Citigroup (NYSE:) shares rose 1.29% following an upbeat outlook from Truist Securities, while Bank of America shares rose 1.5% following positive ratings from at least three brokerages. Some major banks are expected to report quarterly profits next week.
On both the NYSE and Nasdaq, declining issues outnumbered advancing ones by a 2.14-to-1 ratio.
The S&P 500 posted 9 new 52-week highs and 16 new lows, while the Nasdaq Composite posted 60 new highs and 58 new lows.
Volume on U.S. exchanges was 20.45 billion shares, compared with the full-session average of 12.52 billion over the past 20 trading days.
Markets will be closed on Thursday for a national day of mourning in honor of the death of former President Jimmy Carter.