NEW YORK (AP) — Good news about the U.S. economy may no longer be good for Wall Street, with U.S. stock indexes lower Tuesday after better-than-expected reports on the job market and business activity.
The S&P 500 fell 0.4% in morning trading after giving up a small early gain. As of 10:10 a.m. ET, the Dow Jones Industrial Average was down 42 points, or 0.1%, and the Nasdaq Composite was down 0.9%.
Stock markets felt the pressure as bond market yields rose shortly after the release of an encouraging report on the economy. One said U.S. employers are advertising more. Job information By the end of November, it had exceeded economists' expectations. Another said companies in finance, retail and other services grew much faster than expected in December.
Of course, this positive report is good news for workers looking for work and those worried about a possible recession. But Wall Street is also starting to take a big interest in how high Treasury yields will rise, as it's pushing down stock prices. Such strong economic conditions may also make it less likely that the U.S. Federal Reserve will continue to cut interest rates, which traders prefer.
Treasury bonds are one of the safest investments possible, and paying more interest can drive away investors who might otherwise buy the stock. And U.S. Treasuries are becoming more attractive. The yield on the 10-year U.S. Treasury rose to 4.68% from 4.63% just before Tuesday's report release, up from just 4.15% in early December. This is a big move for the bond market.
When Treasury yields rise, it becomes more expensive to borrow for everyone, from huge multinational corporations to homebuyers looking for mortgages.
U.S. Treasury yields are rising because the U.S. economy has been very strong, defying recession predictions after the Federal Reserve raised short-term interest rates in recent years to curb inflation. is a contributing factor. There were hopes that the economy would be rescued after the Federal Reserve began lowering short-term interest rates in September.
But the Fed recently said it may cut its key interest rates less often in 2025 than initially expected. Although inflation has eased from its peak of over 2%, stubbornly remain above Fed's 2% target. Threats from tariffs and other policies President-elect Donald Trump Concerns have been raised about the possibility of a put. upward pressure on inflation,it is
Helping to subdue U.S. stock indexes was a 3.1% rise in Cintas after announcing a proposal to buy smaller rival UniFirst for $275 a share in cash.
Cintas said it first made the proposal in November but was unable to convene UniFirst's board of directors. Cintas, which supplies companies with products such as uniforms, toiletries and fire extinguishers, said UniFirst rejected an earlier offer of $255 per share.
UniFirst soared 27.7% to $216.26, below Cintas' asking price.
Elsewhere on Wall Street, both Shutterstock and Getty If you join, it will be $3.7 billion. A visual content company that provides customers with a wide range of still images, video, music, 3D and other media.
Getty Images shareholders will own a small majority of the combined company. Getty stock rose 25.6% and Shutterstock rose 21.5%.
In overseas stock markets, some prominent Chinese companies fell in response to the US Department of Defense. Added dozens to list Number of companies that say they have ties to the Chinese military. Following the announcement, some companies protested and said they would demand the decision be reversed.
Added to the list are gaming and technology company Tencent, artificial intelligence company SenseTime, and CATL, the world's largest battery manufacturer. Tencent shares traded in Hong Kong fell 7.3%.
This caused the Hang Seng Index to fall by 1.2%, but the index remained steady in other parts of China, Asia and most of Europe.
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AP Business writers Yuri Kageyama and Matt Ott contributed.
