S&P 500: Economic Resilience Dims Fed Cut Hopes, Tech and Consumer Stocks Drop

Wall Street Slips as Strong Data Delays Rate Cut Hopes

Wall Street’s major indexes fell on Tuesday, dragged down by technology stocks after strong economic data raised doubts about the pace of Federal Reserve rate cuts. Traders reassessed expectations for monetary easing, adding pressure to equity markets.

At 16:33 GMT, the Dow Jones Industrial Average is trading 42740.38, up 33.82 or +0.08%. The S&P 500 Index is at 5951.85, down 23.53 or -0.39% and the Nasdaq Composite is trading 19661.26, down 203.72 or -1.09%.

The Labor Department reported 8.098 million job openings in November, exceeding forecasts of 7.7 million. Additionally, December’s ISM services index rose to 54.1, surpassing the projected 53.3. These indicators of economic resilience prompted investors to push back bets on the Fed’s first rate cut to June, according to CME’s FedWatch tool.

Adding to the pressure, the 10-year Treasury yield surged to 4.677%, its highest since May 2024. This upward move weighed on interest-rate-sensitive sectors, with financials and real estate dipping while technology stocks slid 0.8%. Nvidia dropped 2.6%, contributing to the sector’s weakness. Tesla also fell 2.9% following a downgrade by BofA Global Research.

Which Sectors Are Bearing the Brunt of the Decline?

Technology stocks led the downturn, with the sector dropping 1.45% as Nvidia’s losses rippled through the market. Communication services dipped 0.44%, while real estate fell 0.22%. On the positive side, healthcare stocks gained 0.74%, supported by vaccine makers responding to rising bird flu concerns. Materials rose 0.72%, and financials edged up 0.49%, driven by bank stocks.

Energy outperformed, climbing 1.27% as sector strength offset broader market weakness. Consumer discretionary stocks lagged the most, shedding 1.58%, weighed down by Tesla’s performance.

Where Are the Biggest Stock Moves Happening?

Moderna surged over 10%, leading S&P 500 gainers after heightened bird flu fears boosted demand for vaccine makers. Micron Technology jumped 5% following comments from Nvidia CEO Jensen Huang, who confirmed Micron’s role in providing memory for the upcoming GeForce RTX 50 Blackwell gaming chips.

Conversely, Palantir Technologies dropped 5.36%, leading the decliners, followed by Nvidia and Tesla. Warner Bros Discovery and Take-Two Interactive also recorded losses of over 3.5%.

What’s Driving Bank Stocks and Financials?

Citigroup and Bank of America rose 0.3% and 0.6%, respectively, following bullish coverage from analysts. Positive ratings from multiple brokerages buoyed the financial sector, helping offset losses in other rate-sensitive areas.

Despite rising Treasury yields, the banking sector remained resilient, supported by expectations of continued economic strength and robust earnings forecasts.

What’s Next for the Market?

Investors are turning their attention to upcoming non-farm payrolls data and the release of the Fed’s December meeting minutes. These events are expected to provide further insight into the central bank’s policy outlook.

Near-term market sentiment remains bearish as strong economic indicators diminish hopes for an early rate cut. Rising bond yields and lingering uncertainty over monetary policy could sustain pressure on equities, especially in growth sectors like technology and consumer discretionary.

More Information in our Economic Calendar.