On Tuesday, the benchmark S&P 500 and the Nasdaq experienced declines, pressured by technology shares after a series of positive economic reports raised doubts among investors regarding the speed of monetary policy relaxation the Federal Reserve might undertake this year.
U.S. equity markets surrendered early advances following a Labor Department report indicating an unexpected rise in job openings during November, while another report revealed an increase in services sector activity in December, with a gauge measuring input costs soaring to a nearly two-year peak.
Indicators of ongoing strength in the economy have delayed projections on when the central bank might implement its initial interest rate cut this year. Traders are currently forecasting the reduction to occur in May, with the Fed maintaining its position for the remainder of 2025, as suggested by the CME Group’s FedWatch tool.
“Companies expect prices to rise further in 2025 due to tariffs,” stated Bill Adams, chief economist for Comerica Bank, in a statement.
“A combination of steady growth and a new surge of inflationary pressure from tariffs suggests the Fed is likely to transition from cutting interest rates at each meeting … to pausing between rate reductions in 2025.
As of 12:16 p.m. ET, the Dow Jones Industrial Average decreased by 14.40 points, or 0.03%, reaching 42,692.16, the S&P 500 fell by 39.06 points, or 0.65%, to 5,936.32, and the Nasdaq Composite declined by 281.14 points, or 1.42%, to 19,582.88.
The yield on the 10-year Treasury note increased to 4.68% – marking its highest point since May – contributing to a 1.8% drop in technology stocks. Nvidia, a key player in AI, fell by 5.2%.
Six out of the 11 S&P 500 sectors experienced declines, with consumer discretionary suffering the most, decreasing by 1.9%. Conversely, energy shares rose by 1.5% due to climbing crude oil prices.
This week’s main focus is the crucial non-farm payrolls data, along with the minutes from the Federal Reserve’s December meeting.
In the previous trading session, the S&P 500 and the Nasdaq fell short of one-week peaks as uncertainty arose following President-elect Donald Trump’s denial of a report suggesting his team was considering less aggressive tariff strategies.
Analysts have indicated that if Trump’s campaign promises, such as tax reductions, tariffs, and deregulation, are executed, they could boost the economy, though this may also heighten inflation and slow down the rate of cuts. His tariff strategies, if enacted, could lead to a trade confrontation with the nation’s key partners.
Tesla shares fell by 3.9% after BofA Global Research downgraded the stock from “buy” to “neutral.”
Micron Technology gained 4.5% after Nvidia CEO Jensen Huang announced that the chip manufacturer was supplying memory for the GeForce RTX 50 Blackwell family of gaming chips.
Citigroup advanced 1.6% driven by optimistic coverage from Truist Securities, while Bank of America increased by 1.6% following favorable ratings from at least three brokerage firms. Several major banks are anticipated to report their quarterly earnings in the coming week.
Decliners outnumbered advancers by a 1.74-to-1 ratio on the NYSE and by a 2.01-to-1 ratio on the Nasdaq.
The S&P 500 recorded seven new 52-week highs and nine new lows, whereas the Nasdaq Composite noted 47 new highs and 45 new lows.
Markets will be closed on Thursday in observance of a national day of mourning for the late former President Jimmy Carter.
