Investing.com-- The S&P 500 closed sharply lower Tuesday, as tech was hurt by rising Treasury yields after economic data flagged concerns about stickier inflation, reining in bets of further Federal Reserve rate cuts.
At 4:00 p.m. ET (21:00 GMT), the Dow Jones Industrial Average fell 177 points, or 0.4%, the S&P 500 index fell 1.1%, and the NASDAQ Composite rose 65 points, or 1.9%.
Treasury yields rise after data point to fresh inflation concerns
Treasury yields jumped as services data for December showing signs of inflationary pressure and a jump in job openings for November stoked concerns about inflation, casting doubt on sooner rate cuts.
The prices paid component in the ISM non-manufacturing survey rose to "the highest level since September 2023, and continued a 91-month streak of readings above 50," Jefferies said in a Tuesday note. "This is not great news for the Fed achieving it's inflation target, but it is consistent with a strong pace of activity in the sector overall," it added.
The ADP private payrolls report is slated for Wednesday, ahead of Friday's widely-watched December’s nonfarm payrolls report.
Nvidia leads tech lower; Tesla gets BofA downgrade
Nvidia (NASDAQ:NVDA) fell 6% Tuesday, giving up early-day gains as rising Treasury yields blunted growth sectors of the market including tech. The chipmaker's retreat comes a day after briefly hitting a record high.
At CES 2025, a major annual tech conference in Las Vegas, CEO Jensen Huang laid out how the world's second-most valuable firm is bringing technology that powers its lucrative data center AI chips to consumer PCs and laptops.
Meta Platforms (NASDAQ:META stock fell 2% after the Facebook-parent said it would end its current third-party fact-checking program in the United States and instead begin moving to a 'Community Notes' program similar to that on social media platform X.
Microsoft (NASDAQ:MSFT) stock fell 1% after the software giant announced plans to spend $3 billion to expand its Azure cloud and artificial intelligence capacity in India.
Tesla Inc (NASDAQ:TSLA) fell more than 4% after Bank of America downgraded the EV maker to neutral from buy, citing valuation concerns.
Trump comments temper optimism
Beyond tech, gains in stock markets were somewhat tempered by U.S. President-elect Donald Trump denying media reports that his administration will pursue a less aggressive tariff regime than previously feared.
Trump denied a Washington Post report that his administration will only target certain sectors in imposing trade tariffs, instead of the broad tariffs promised by Trump during his campaigning.
Uncertainty over Trump’s policies had also weighed on Wall Street in the beginning of the year, given that he is widely expected to enact expansionary and protectionist policies that could underpin inflation and disrupt global trade.
(Peter Nurse, Ambar Warrick contributed to this article.)