US stocks fell on Tuesday, weighed by technology stocks after a batch of upbeat economic data raised concerns that an inflation rebound could slow the pace of monetary policy easing that the Federal Reserve could pursue this year. Stocks gave up early gains after a Labor Department report showed job openings unexpectedly increased in November, while a separate report said services sector activity accelerated in December with a measure tracking input prices surging to a near two-year high.
'Both of those things potentially have inflationary impacts and, as a result, yields have increased. That's definitely weighing on stocks,' said Mike Dickson, head of research at Horizon Investments. Benchmark 10-year Treasury yields hit an eight-month high at 4.677% after the data pointed to a strong economy. Signs of continued resilience in the economy have pushed back expectations on when the central bank can deliver its first interest rate reduction this year. Traders now see the next cut more likely in June and the Fed staying on hold for the rest of 2025, according to the CME Group's FedWatch tool. 'Businesses anticipate prices rising further in 2025 as a result of tariffs,' Bill Adams, chief economist for Comerica Bank, said in a note. 'A mix of solid growth and a new wave of inflationary pressure from tariffs means the Fed will likely switch from cutting interest rates at every decision ... to pausing in between rate cuts in 2025.