US close: Stocks drop as bond yields hit eight-month high

(Sharecast News) - US stocks sold off sharply on Tuesday as bond yields hit a nine-month high on the back of stronger-than-expected economic data and renewed concerns about inflation.

The Dow finished 0.4% lower, while the S&P 500 and Nasdaq dropped 1.1% and 1.9% respectively, pulling back after two days of solid gains.

Weighing on sentiment was a jump in 10-year US Treasury yields, up 5.3 basis points at 4.689%, hitting levels not seen since last April ahead of the Treasury's auction of $39bn of 10-year notes after the close.

Meanwhile, the yield on a 30-year US bond was up 5.8 basis points at 4.916%, its highest since October 2023, ahead of a sale of $22bn of 30-year bonds on Wednesday.

"A couple of days into the first full week of 2025 and markets are waking up to some uncomfortable truths," said AJ Bell's head of financial analysis, Danni Hewson.

"Interest rates are expected to stay higher for longer as central bankers around the world have to price in politics and no one really knows whether Donald Trump will follow through with the threat of mega tariffs or if the incoming president is just playing a global game of chicken."

Services PMI, job openings

The closely watched ISM services purchasing managers' index rose to 54.1 in December, up from 52.1 in November and comfortably ahead of the 53.3 consensus forecast. This was the 10th straight month of expanding activity in the sector.

A key sub-index of new orders improved from 53.7 to 54.2, whilst that tracking the prices paid by companies jumped from 58.2 to 64.4. Purchasing managers from several sectors cited by ISM noted concern or uncertainty around the tariffs that the new Trump administration might put in place.

Meanwhile, the number of job openings in the US rose to 8.10m in November, up from 7.84m in October and above the 7.70m expected by the market. However, while numbers were up month-on-month, the ratio of openings to unemployed workers was still below pre-pandemic norms and doesn't necessarily equate to a healthy jobs market.

Specifically, the number of quits continued to decline, falling by 1.9% or 218,000 to 3.1m, which could imply that workers are less confident about securing another job.

The labour market will be in keen focus this week, with the ADP Employment Report for December on Wednesday, weekly jobless claims on Thursday and the all-important non-farm payrolls figure on Friday.

Tech stocks tank

Nvidia's stock finished down 6% with the market underwhelmed by chief executive Jensen Huang's keynote speech at CES the previous evening, which included announcements about the next generation of AI-powered gaming chips using its Blackwell technology, as well as advancements in self-driving cars and robotics.

With the shares having jumped 11% in the past three sessions combined, and analysts expressing disappointment about the lack of details surrounding Blackwell production, investors chose to take profits.

Others in the chip sector such as TSMC, Dell and Broadcom were also out of favour on Tuesday.

Bucking the trend however was Micron Technology which jumped 3% after Huang mentioned the company would be providing memory to Nvidia's new gaming chips.

Shares in Meta Platforms were lower after Mark Zuckerberg announced that he would end fact-checking and restrictions on speech across Facebook and Instagram - a move that comes as the founder and chief executive attempts to form closer relationships with the incoming Trump administration.

Getty Images jumped 24% on the news that it is to merge with rival photo agency Shutterstock in a deal worth $3.7bn. In a joint statement, the Wall Street firms said the deal would create a content library with "greater depth and breadth for the benefit of customers [and] expanded opportunities for its contributor community".

Dow Jones - Risers

Walgreens Boots Alliance, Inc. (WBA) $9.67 2.11% 3M Co. (MMM) $132.77 1.90% Johnson & Johnson (JNJ) $146.23 1.79% Chevron Corp. (CVX) $149.59 1.58% Amgen Inc. (AMGN) $262.06 1.34% Merck & Co. Inc. (MRK) $101.00 1.30% Boeing Co. (BA) $172.51 1.01% JP Morgan Chase & Co. (JPM) $243.17 0.96% Intel Corp. (INTC) $20.01 0.70% International Business Machines Corporation (CDI) (IBM) $223.90 0.58%

Dow Jones - Fallers

Verizon Communications Inc. (VZ) $38.92 -1.74% Salesforce.Com Inc. (CRM) $324.93 -1.69% Home Depot Inc. (HD) $384.35 -1.32% Microsoft Corp. (MSFT) $422.31 -1.29% Apple Inc. (AAPL) $242.22 -1.13% McDonald's Corp. (MCD) $289.08 -0.97% Dow Chemical Co. (DOW) $39.41 -0.86% Walmart Inc. (WMT) $90.81 -0.68% Goldman Sachs Group Inc. (GS) $580.12 -0.56% Visa Inc. (V) $311.74 -0.44%

S&P 500 - Risers

FMC Corp. (FMC) $51.13 2.94% Leggett & Platt Inc. (LEG) $9.83 2.93% Devon Energy Corp. (DVN) $34.69 2.79% Universal Health Services Inc. (UHS) $186.07 2.73% United Airlines Holdings Inc (UAL) $101.21 2.68% Micron Technology Inc. (MU) $101.91 2.67% Everest Group (EG) $371.08 2.59% Paychex Inc. (PAYX) $139.26 2.35% Cencora Inc (COR) $234.24 2.34% Laboratory Corporation of America Holdings (LH) $235.10 2.25%

S&P 500 - Fallers

Nvidia Corp. (NVDA) $140.14 -6.22% CenturyLink Inc. (LUMN) $5.57 -4.64% Take-Two Interactive Software Inc. (TTWO) $181.79 -3.80% Advance Auto Parts (AAP) $45.99 -3.75% Bread Financial Holdings, Inc. (BFH) $59.58 -3.43% Broadcom Inc. (AVGO) $228.64 -3.29% Blackrock Inc. (BLK) $980.76 -3.16% Arista Networks Inc. (ANET) $115.29 -3.10% Charles Schwab Corp. (SCHW) $72.26 -2.98% CBRE Group Inc (CBRE) $128.64 -2.83%

Nasdaq 100 - Risers

Micron Technology Inc. (MU) $101.91 2.67% Paychex Inc. (PAYX) $139.26 2.35% PACCAR Inc. (PCAR) $109.56 2.16% Walgreens Boots Alliance, Inc. (WBA) $9.67 2.11% Regeneron Pharmaceuticals Inc. (REGN) $730.30 1.96% Cintas Corp. (CTAS) $188.72 1.96% Skyworks Solutions Inc. (SWKS) $92.62 1.89% Incyte Corp. (INCY) $73.19 1.78% NetEase Inc. Ads (NTES) $89.72 1.70% Vertex Pharmaceuticals Inc. (VRTX) $408.42 1.47%

Nasdaq 100 - Fallers

Nvidia Corp. (NVDA) $140.14 -6.22% Tesla Inc (TSLA) $394.36 -4.06% Take-Two Interactive Software Inc. (TTWO) $181.75 -3.80% Broadcom Inc. (AVGO) $228.64 -3.29% Synopsys Inc. (SNPS) $487.62 -2.68% Wynn Resorts Ltd. (WYNN) $82.45 -2.55% Amazon.Com Inc. (AMZN) $222.11 -2.42% Booking Holdings Inc. (BKNG) $4,796.10 -2.32% Ross Stores Inc. (ROST) $151.56 -2.19% Cadence Design Systems Inc. (CDNS) $301.67 -2.10%