NEW YORK (AP) 鈥 Good news on the U.S. economy is back to being bad for Wall Street. The S&P 500 swung to a loss of 1.1% after a pair of reports on the economy came in better than expected. The Dow Jones Industrial Average dropped 0.4%, and the Nasdaq composite tumbled 1.9%. While the strong reports on the U.S. job market and business activity were good news for anyone worried about a possible recession, they could also make it less likely the Federal Reserve will cut interest rates. Treasury yields jumped after the reports, and Nvidia and other Big Tech stocks took some of the heaviest hits.
THIS IS A BREAKING NEWS UPDATE. AP鈥檚 earlier story follows below.
NEW YORK (AP) 鈥 Good news on the is back to being bad for Wall Street, and the stock market is sinking Tuesday toward its worst day in nearly three weeks following better-than-expected reports on the job market and business activity.
The S&P 500 swung to a loss of 1.4% after giving up an early morning gain. The Dow Jones Industrial Average was down 314 points, or 0.7%, with less than 30 minutes remaining in trading, while the Nasdaq composite tumbled 2.2%.
Stocks dropped under the weight of rising yields in the bond market, which jumped immediately after the release of the encouraging reports on the economy. One said U.S. employers were advertising more at the end of November than economists expected. The other said much faster in December than expected.
The strong reports are of course good news for and for anyone worried about a possible recession that . But such a solid economy could also keep up pressure on inflation, and it could make the Federal Reserve less likely to deliver the cuts to interest rates that Wall Street loves.
The Fed to give the economy a boost, but it's is coming. The threat of tariffs from has raised worries about possible , which has the Fed鈥檚 2% target.
Tuesday's report on U.S. services industries from the Institute for Supply Management also contained discouraging trends on inflation, saying price increases accelerated in December.
Expectations for fewer cuts to interest rates in 2025 had already been building for weeks, which sent longer-term Treasury yields upward. So have worries about other possible Trump policies, such as tax cuts, which could swell the U.S. government鈥檚 debt and likewise push yields higher.
Those higher yields make Treasury bonds more attractive to investors who might otherwise buy stocks, which in turn puts downward pressure on stock prices, and the super-safe bonds are paying notably more. The yield on a 10-year Treasury climbed further to 4.68% from 4.63% shortly before the release of Tuesday's reports and from just 4.15% in early December.
High yields can put heavy pressure on stocks seen as the most expensive, which pulls the lens toward Nvidia and other Big Tech stocks that have soared in the frenzy around artificial-intelligence technology.
had been on track to set another all-time high in morning trading, after CEO and partnerships the night before. He talked up the potential for in robotics, among other opportunities for big growth.
But after Tuesday economic reports, which dropped following the market's first half hour of trading, Nvidia swung to a loss of 6.1% and became the heaviest weight on the S&P 500. Losses for Tesla, Amazon, Apple and Microsoft were also among the strongest forces dragging the index lower.
Now that worries from the summer about a potentially slowing U.S. economy have eased and the 10-year Treasury yield is firmly above 4.50%, 鈥渨e believe the market is shifting into a 鈥榞ood news is bad news鈥 environment again,鈥 according to Bank of America strategists led by Ohsung Kwon.
That raises the stakes for Friday's coming update on the U.S. job market, which economists expect will show a slowdown in overall hiring. They're looking for growth of 156,500 jobs in December, according to FactSet.
A 鈥淕oldilocks鈥 reading for the U.S. stock market that would be solid but not too strong for the Fed would likely be in the 125,000 to 175,000 range, along with an unemployment rate of 4.2%, according to Bank of America.
Helping to keep Tuesday's losses for U.S. stock indexes in check was Cintas, which rose 2.1% after making public its offer to buy its smaller rival, UniFirst, for $275 per share in cash.
Cintas said it first made that offer in November but has been unable to get UniFirst鈥檚 board to meet. UniFirst had rejected an earlier offer of $255 per share, said Cintas, which provides uniforms, restroom supplies, fire extinguishers and other products to businesses.
UniFirst jumped 20.2% to $203.53, below Cintas鈥 offer price.
Elsewhere on Wall Street, Shutterstock and Getty both climbed after they announced they were visual content company to provide customers with a broader array of still imagery, video, music, 3D and other media.
Getty Images shareholders will own a slight majority of the combined company. Getty shares jumped 20%, while Shutterstock climbed 14.8%.
In stock markets abroad, some notable Chinese companies fell after the U.S. Defense Department of companies it says have ties to China鈥檚 military. The announcement caused some of the companies to protest and say they will seek to have the decision reversed.
Added to the list were gaming and technology company Tencent, artificial intelligence firm SenseTime and the . Tencent鈥檚 stock that trades in Hong Kong fell 7.3%.
That helped pull the Hang Seng index down 1.2%, but indexes were stronger elsewhere in China and across much of Asia and Europe.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
