Wall Street Turns Mixed Amid Strong Economic Reports/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ U.S. stock markets turned mixed on Tuesday as strong economic data on job openings and business growth pushed Treasury yields higher. The S&P 500 fell 0.4%, the Dow dropped 42 points, and the Nasdaq slipped 0.9% as investors adjusted to the potential for fewer Federal Reserve rate cuts. Meanwhile, merger announcements boosted Cintas, Shutterstock, and Getty, while Chinese stocks struggled under new U.S. restrictions.
Wall Street Today: Quick Looks
- Index Performance: S&P 500 fell 0.4%; Dow down 42 points; Nasdaq dropped 0.9%.
- Economic Data: Job openings and business activity exceeded forecasts, signaling economic resilience.
- Treasury Yields: The 10-year Treasury yield climbed to 4.68%, pressuring stock prices.
- Mergers: Cintas and Shutterstock shares surged on acquisition announcements.
- Chinese Stocks: U.S. defense restrictions hit Tencent and others, dragging the Hang Seng Index down 1.2%.
Wall Street Turns Mixed Amid Strong Economic Reports
Deep Look
U.S. stock markets turned mixed on Tuesday as better-than-expected economic reports sparked concerns about rising Treasury yields and the Federal Reserve’s policy outlook. Despite initial gains, the S&P 500 slipped 0.4%, the Dow Jones Industrial Average fell 42 points (0.1%), and the Nasdaq Composite dropped 0.9% by mid-morning.
Economic Data Boosts Yields
Two strong economic reports jolted the bond market, pushing yields higher. U.S. job openings in November exceeded forecasts, signaling a robust labor market, while business activity in finance, retail, and other service sectors surged in December.
While these indicators point to a healthy economy and diminish immediate recession fears, they complicate Wall Street’s expectations for Federal Reserve rate cuts. Rising yields on Treasury bonds, often seen as safe investments, can lure investors away from riskier assets like stocks and make borrowing more expensive for businesses and consumers alike.
The yield on the 10-year Treasury jumped to 4.68%, up from 4.63% earlier in the day and significantly higher than 4.15% in early December.
Fed Policy and Inflation Concerns
The Federal Reserve has hinted at fewer rate cuts in 2025 than previously anticipated, citing persistently elevated inflation. Although inflation has cooled from its peak, it remains just above the Fed’s 2% target. Meanwhile, President-elect Donald Trump’s proposed tariffs and economic policies have raised concerns about upward pressure on inflation, adding another layer of uncertainty for investors.
Merger Activity Fuels Stock Gains
Despite broader market challenges, individual stocks saw sharp movements driven by merger announcements:
- Cintas: Shares rose 3.1% after it revealed a $275-per-share cash offer for rival UniFirst, which rejected a previous $255 offer. UniFirst surged 27.7% to $216.26, remaining below the offer price.
- Shutterstock and Getty: The two companies announced plans to merge into a $3.7 billion visual content powerhouse. Getty shareholders will hold a slight majority of the new company, sending Getty shares up 25.6% and Shutterstock up 21.5%.
Global Markets and Chinese Stocks
International markets presented a mixed picture. The Hang Seng Index fell 1.2% after the U.S. Defense Department added several Chinese companies, including Tencent, SenseTime, and CATL, to a list of entities allegedly tied to China’s military. Tencent’s Hong Kong-traded shares dropped 7.3%.
Meanwhile, other Asian and European markets showed resilience, with stronger performances across major indexes outside China.
Looking Ahead
The interplay between strong economic data, rising bond yields, and Fed policy uncertainty continues to shape Wall Street’s outlook. As investors balance optimism about economic resilience with concerns over tighter financial conditions, markets are likely to remain volatile in the short term.
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