US stocks slide as strong data sends Treasury yields higher

US stocks fell on Tuesday, while government bond yields jumped, after strong jobs and services data led investors to bet the Federal Reserve will cut interest rates just once this year.

Wall Street’s S&P 500 index fell 1.1 percent, while the tech-heavy Nasdaq Composite closed down 1.9 percent.

Electric car maker Tesla and semiconductor giant Nvidia were among the biggest losers, falling more than 4 percent and 6 percent, respectively.

In government bond markets, the 10-year US Treasury yield rose – A global standard Fixed income assets rose 0.08 percentage points to 4.69 percent, their highest level since April. Higher yields indicate lower prices.

The moves came in the wake of reports that the world’s largest economy remains in good health, casting further doubt on the extent to which the Federal Reserve is likely to cut interest rates later this year.

“The bond market has finally come around to the idea that the Fed is not going to step in and bail us all out with a whole bunch of liquidity and interest rate cuts,” said Sonal Desai, chief investment officer at Franklin Templeton Fixed Income. “[Investors are] We look at the data and slowly digest the fact that the economy is actually very strong.

The Institute for Supply Management’s non-manufacturing PMI, a measure of activity in the sprawling U.S. services sector, rose to 54.1 in December, higher than economists’ expectations of 53.3. A reading above 50 indicates expansion.

Separate data from the US Bureau of Labor Statistics showed there were 8.1 million job openings in November, above expectations of 7.7 million openings, indicating unexpectedly strong demand for US workers.

Investors are watching measures of business activity and labor market health closely for clues about how far and how quickly the Fed will cut interest rates.

In the wake of Tuesday’s data, investors were betting that the central bank would cut interest rates by a quarter of a percentage point by July, with a roughly 35 percent chance of making another such move by the end of the year. Earlier in the day, the odds of a second quarter-point cut were about 70 percent.

The Fed cut interest rates for the first time from their highest levels in 23 years in September and made two additional cuts before the end of 2024. However, policymakers in December signaled a slowing pace of easing in 2025, highlighting persistent concerns about inflation and raising concern Investors.

In a week shortened by Thursday’s stock market close and a half-day for bonds, investors are also bracing for December payroll data.

Economists polled by Reuters expect Friday’s numbers to show that US employers added 160,000 new jobs last month, down sharply from 227,000 jobs in November.

“People are preparing to read non-farm payrolls on Friday and are worried about a big explosion,” said Desai of Franklin Templeton.

She added: “If we get a big number on Friday, I think you will see this rally go further.” [in Treasury yields]”.