Stocks declined as economic data spurred Treasury yield rise, raising Fed rate cut concerns; Nvidia, Tesla, and major tech stocks fell.
Stocks declined on Tuesday following new economic data that increased Treasury yields and raised concerns about potential Federal Reserve rate cuts.
The S&P 500 fell nearly 0.8%, while the Dow Jones Industrial Average lost 56 points or 0.1%. The Nasdaq Composite dropped 1.5%. Earlier in the day, major averages had traded higher before reversing direction.
Economic data from the Institute for Supply Management showed unexpectedly strong growth in the U.S. services sector for December, heightening concerns about persistent inflation. The 10-year Treasury yield rose nearly 6 basis points to 4.675%.
Tom Hainlin, senior investment strategist at U.S. Bank Asset Management Group, indicated that inflation and Fed rate expectations are being recalibrated, contributing to this sell-off in equity markets after initial optimism.
Despite the decline, Hainlin pointed out that the ISM data reflects robust consumer and labour markets, suggesting strong overall economic growth that could benefit corporate earnings.
Nvidia’s stock fell over 5% after reaching a record high, following the company’s announcement of new chips for PCs. Tesla also dropped nearly 4% after being downgraded by Bank of America due to high valuations and strategic risks.
Other major tech stocks, such as Meta Platforms and Amazon, also experienced losses of approximately 1.9% each, as the broader market declined.
This modest pullback followed a previous session marked by gains in semiconductor stocks and a report about President-elect Donald Trump’s tariff plans, which he later disputed.
