Stocks fell Tuesday as strong economic data raised questions about the possibility of Federal Reserve rate cuts later this year, leading to a spike in Treasury yields. Declines across major tech stocks also dragged the market lower.
The S&P 500 dipped 1.11% to close at 5,909.03. The Dow Jones Industrial Average lost 178.20 points, or 0.42%, and ended at 42,528.36. The Nasdaq Composi slid 1.89% to 19,489.68. The major averages traded higher earlier in the day before rolling over.
Data released Tuesday by the Institute for Supply Management reflected faster-than-expected growth in the U.S. services sector in December, adding to concerns about stickier inflation.
Bond yields rose on the data, adding onto the recent climb in yields fueled largely by bets that the incoming administration’s tariff plans could boost inflation. The 10-year Treasury yield was last up more than 7 basis points at 4.693% and earlier hit an intraday high of 4.699%, its highest level since April.
