⭐ Start off 2025 with a powerful boost to your portfolio: January’s freshest AI-picked stocksUnlock stocks

Stocks fall, US yields rise after strong US data

Published 01/06/2025, 09:29 PM
Updated 01/07/2025, 05:02 PM
© Reuters. FILE PHOTO: A man walks past electronic screens displaying Japan's Nikkei share average outside a brokerage in Tokyo, Japan August 2, 2024. REUTERS/Issei Kato/File photo
USD/JPY
-
JP225
-
HK50
-
GC
-
LCO
-
UK100
-
ESH25
-
CL
-
NQH25
-
SSEC
-
CSI300
-
MIAP00000PUS
-

By Chibuike Oguh

NEW YORK (Reuters) -Global stocks lost ground while U.S. Treasury yields edged higher on Tuesday after data showed the American economy remained resilient, indicating the Federal Reserve could cut interest rates fewer times this year than the market had been expecting.

On Wall Street, all three main indexes finished lower, with technology, consumer discretionary, and communication services stocks among the biggest losers. Energy and healthcare stocks advanced.

U.S. services sector activity accelerated in December, beating expectations, while a measure of prices paid for inputs rose to a nearly two-year high, according to data from the Institute for Supply Management.

Labor Department data also showed U.S. job openings unexpectedly increased in November, although a softening in hiring pointed to a slowing labor market.

Markets are currently pricing in the probability of just one Fed cut in 2025, down from two rate cuts in December, according to the CME FedWatch tool.

"The Trump trade has taken a bit of a breather right now because bond yields have been rising," said Wasif Latif, chief investment officer at Sarmaya Partners in New York. "I think the market is beginning to take note that between tariffs and the deficit that there's question marks about how we're going to be able to lower the deficit with all this promised spending coming in terms of tax cuts and other things the new administration wants to implement."

The Dow Jones Industrial Average fell 0.42% to 42,528.36, the S&P 500 fell 1.11% to 5,909.03 and the Nasdaq Composite fell 1.89% to 19,489.68.

European stocks held their gains after rallying on Monday following a report saying President-elect Donald Trump's aides are considering narrower tariffs than previously thought.

The European STOXX 600 index rose 0.32% for its second consecutive gain. It rose 1.75% on Monday following the report on tariffs, which caused shares of automakers to rally. MSCI's gauge of stocks across the globe fell 0.75% to 846.52.

Benchmark 10-year Treasury yields hit an eight-month high, buoyed by data showing the U.S. economy remained strong. The yield on 10-year notes rose 7.5 basis points to 4.691%, having peaked at 4.699%, the highest since April 26.

"The 10-year continues to inch higher and the equity market hasn't picked up on the fact that bond yields are rising, and rising long-term yields is not good for equities," Latif added.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro,rose 0.33% to 108.67, with the euro down 0.47% at $1.0341.

The greenback rose to a near six-month peak against the Japanese yen after the U.S. data. It was up 0.23% at 157.96 yen. Earlier in the global session, the dollar hit its highest since July at 158.425 yen.

Oil prices settled higher, driven by concerns over limited supply from Russia and Iran because of Western sanctions and expected higher Chinese demand.

© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 10, 2024.  REUTERS/Brendan McDermid/File Photo

Brent crude futures settled up 0.98% at $77.05 a barrel. U.S. West Texas Intermediate (WTI) crude finished at $74.25 a barrel, up 0.94%.

Spot gold rose 0.53% to $2,649.38 an ounce. U.S. gold futures settled 0.7% higher at $2,665.40.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.