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US stocks reversed early gains to close firmly lower as cautious investors weighed new economic data, while Nvidia (NVDA) retreated from its record close despite the company’s big artificial intelligence plans.
The benchmark S&P 500 (^GSPC) fell over 1.1%, while the tech-heavy Nasdaq Composite (^IXIC) lost roughly 1.9%. The Dow Jones Industrial Average (^DJI) bounced around throughout the day but ended the session down about 0.4%.
Meanwhile, the 10-year Treasury yield (^TNX) added roughly 7 basis points to hover just below 4.7%. And bets on when the Federal Reserve will next cut interest rates were pushed back, too.
Early on Tuesday, the Institute for Supply Management’s manufacturing PMI indicated the manufacturing sector continued to expand last month, although the prices paid index jumped to a nearly two-year high of 64.4, up from the prior 58.2.
The surge in prices "is a worry for the Fed," Capital Economics North America economist Thomas Ryan wrote.
"This serves as a good reminder that the Fed’s fight against inflation is not over, particularly going into a year where tariffs and immigration curbs are set to reignite price pressures."
Additionally, JOLTS job openings rose more than expected during the month of November. Fewer hires were also made compared to the previous month while the quits rate, a sign of confidence among workers, fell to 1.9% from 2.1% in October.
The data sets the stage for Friday’s all-important December jobs report. Investors are now betting with almost certainty that the central bank keeps interest rates unchanged later this month, according to the CME FedWatch tool. Traders are also placing a less than 50% chance the central bank cuts rates ahead of its June meeting.
Meanwhile, Nvidia shares reversed gains to fall over 6% after hitting a record close just one day prior. The chip maker was the Dow’s worst performer of the session. Nvidia CEO Jensen Huang’s CES keynote on Monday revealed a new AI superchip among other planned products.
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