US equity indexes experienced declines as stronger-than-expected job openings and services sent the 10-year government bond yield to an eight-month high, leading to a notable downturn in the communication services and technology sectors. The S&P 500 took a hit, falling 0.5% to 5,943.7, while the Nasdaq Composite dropped by 1.2%, landing at 19,630.3.
The Dow Jones Industrial Average also slid slightly, resting at 42,695.2 during midday trading on Tuesday. Energy stocks emerged as the dominant gainers despite the overall market decline. Among the significant underperformers in the S&P 500 and Nasdaq were Nvidia (NVDA) and Palantir (PLTR), which saw declines of 4.5% and 6.5%, respectively, during intraday trading.
Tesla (TSLA) also joined the list of lagging stocks in the S&P 500, which faced a 4.1% drop, following a record high closing on Monday. According to the Bureau of Labor Statistics, US job openings increased to 8.098 million in November. This figure exceeded the projected 7.74 million openings from a Bloomberg-compiled survey and was an increase from the 7.839 million reported in October. In a further analysis, the Institute for Supply Management's US services index rose to 54.1 in December, up from 52.1 in November, surpassing the anticipated 53.5 from a Bloomberg survey.
This December reading is noted as the third-highest since September 2023, as indicated in a note from Jefferies. Prices within the services data marked the strongest rise since September 2023, maintaining a remarkable 91-month streak of results above 50. Jefferies US economist Thomas Simons remarked that while this data is not ideal for the Federal Reserve in reaching its inflation goals, it does align with a robust pace of overall sector activity. The stability in jobs and services data has reinforced market expectations that the Federal Reserve will implement fewer interest rate cuts this year than previously anticipated, as pointed out in a note by Scotiabank. In the Treasury market, most US yields escalated, with the 10-year yield increasing by 6.3 basis points to reach 4.68%, marking the highest level on an intraday basis since late April.
The two-year yield also experienced a slight uptick of 1.5 basis points, reaching 4.29%. Such higher yields are typically viewed as unfavorable for long-duration investments, particularly in the technology, communication services, and consumer discretionary sectors. Moreover, the US international trade deficit widened to $78.19 billion in November from a $73.62 billion shortfall in October, contrasting with the $78.3 billion gap projected in a Bloomberg survey, driven in part by a surge in imports. In notable consumer trends, online shopping achieved record highs during the 2024 holiday season, with data from Adobe Analytics showcasing consumer spending that rose 8.7% year-on-year, totaling $241.4 billion from November 1 to December 31, surpassing Adobe's earlier projection of $240.8 billion. On the commodities front, West Texas Intermediate crude oil futures climbed 0.8% to $74.17 per barrel.
Meanwhile, gold futures rose by 0.7% to $2,665.22 an ounce, while silver futures saw a 0.4% increase, pricing at $30.72 per ounce. In geopolitical news, it was reported that China's Shandong Port Group, having previously accepted prohibited tanker shipments at its three controlled ports, announced that it will cease accepting sanctioned vessels, which may tighten global supply chains as it halts imports from both Iran and Russia. The market is reacting to these multifaceted developments, balancing positive job growth data against rising yields and geopolitical strains, setting the stage for an unpredictable economic landscape ahead..