The U.S. stock market experienced a significant downturn, with the Nasdaq Composite leading the declines. The tech-heavy index fell approximately 1.9%, reflecting caution among investors. The S&P 500 also faced significant losses, closing down over 1.1%, while the Dow Jones Industrial Average ended down about 0.4%.
This shift in market dynamics comes as new economic data prompted a reassessment of the Federal Reserve's monetary policy trajectory. The 10-year Treasury yield saw an uptick, indicating rising concerns about inflation. Traders adjusted their bets, pushing back the likelihood of an imminent interest rate cut by the Federal Reserve.
Recent data from the Institute for Supply Management showed that the manufacturing sector continued to expand, but the prices paid index surged to a nearly two-year high. This spike in prices has raised alarms among economists, emphasizing that the Federal Reserve's battle against inflation is far from over.
The Job Openings and Labor Turnover Survey (JOLTS) indicated a rise in job openings for November, surpassing expectations. However, the data also showed a decline in hiring compared to the previous month, alongside a drop in the quits rate.
Nvidia experienced a dramatic reversal, with shares plummeting over 6% after reaching a record close just a day prior. The chipmaker's decline made it the worst performer on the Dow for the session. Nvidia's ambitious plans in the artificial intelligence space have generated significant interest, yet the company's stock performance reflects the broader market's cautious stance.
The current market environment is characterized by caution among investors as they navigate economic data and its potential impact on monetary policy. The upcoming December jobs report is poised to be a critical factor in shaping expectations for the Federal Reserve's policy decisions.