4:12pm: Tech sector hit hard
Stocks closed lower on Tuesday as strong economic data led investors to reassess the likelihood of interest rate cuts.
The Dow Jones fell 178 points (0.4%) to 42,528, the S&P 500 dropped 66 points (1.1%) to 5,909, and the Nasdaq declined 373 points (1.9%) to 19,492.
The market's downturn was driven by better-than-expected ISM services PMI and job openings data, which reduced the probability of a Federal Reserve rate cut before June to below 50%.
Technology stocks led the decline, with Nvidia falling 5% after reaching a record high the day before.
The 10-year Treasury yield rose by 6 basis points to just under 4.7%. Despite the broader tech pullback, Micron Technology gained 4%.
3:30pm: Above-trend economic growth
Stock futures fell and long-term Treasury yields rose to near the highest since November 2023 after today’s data releases, which bolster the view that the Fed will cut rates slower this year than expected before the election, Comerica's Bill Adams noted.
The ISM Services PMI was stronger than expected in December, while service-providing businesses reported that Input prices jumped by the most since early 2023.
"The ISM survey, like a range of surveys since the election, shows that animal spirits are improving among groups that tend conservative, including business executives and small business owners," Adams noted.
"The animal spirits effect will likely lift job openings and hiring in 2025, fueling another year of above-trend economic growth."
2:05pm: Anthropic reportedly at $60B
Anthropic is reportedly in the advanced stages of raising a further US$2 billion, which would value the artificial intelligence startup at US$60 billion.
According to the Wall Street Journal, Lightspeed Venture Partners was leading the funding round with the valuation including the funds Anthropic planned to raise.
Anthropic, which was set up in 2021, had been valued at US$18 billion last year following another fundraising round.
12:51pm: Nvidia sinks Nasdaq
As of midday, US markets have retreated from earlier gains, with major indices now in negative territory.
The tech-heavy Nasdaq is leading the decline, down 1.6%, followed by the S&P 500, which has fallen 0.9%, and the Dow Jones Industrial Average, which is off by 0.3%.
The downturn comes after a positive start to the week, driven by enthusiasm surrounding Nvidia's AI initiatives and strong performance in chip stocks. However, investor sentiment has shifted as traders process mixed economic data and anticipate potential policy changes under the incoming Trump administration.
The technology sector, which initially drove market gains, is now facing selling pressure, contributing to the Nasdaq's sharper decline. Nvidia, down 5% around noon, appears to be a significant factor in the broader pullback.
11:52am: Tesla downgraded on execution concerns
Tesla has lost its ‘buy’ rating from Bank of America on growing risks around product execution ahead.
Bank of America bumped Elon Musk’s electric vehicle giant to a ‘hold’ rating in a note, suggesting catalysts around future growth had now been fully realised.
Though the bank lifted Tesla share price target from US$400 to US$490, analysts added the stock was already trading at a level reflecting potential around future products.
10.52am: Stocks now falling as bond yields rise
Nvidia Inc only fleetingly took the crown from Apple as the chipmaker's shares have since dropped sharply.
After just over an hour of trading, shares in the chipmaker have tumbled 5.4%.
This appeared to be profit-taking but may have been triggered by a rise in bond yields, with fellow tech giants Meta Platforms 3% and Tesla slipping 4%.
The Nasdaq Composite is down 1.3% now, with the S&P 500 falling 0.6% and the Dow Jones down less than 0.1%.
Amid the turnaround in share directions, there was the release of US job openings, which surprised by rising to a six-month high in November, boosted by a jump in business services.
A strong ISM services print may also have played a role in driving yields higher, traders said, with inflation a concern as the services prices index for December climbed to its highest since February 2023.
10am: Meta ends fact-checking
Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) boss Mark Zuckerberg has announced the end of fact-checking on the company's Facebook, Instagram and Threads social media platforms, following meetings with President-Elect Donald Trump.
Zuckerberg said in a video announcement that the company will "get rid of fact-checkers and replace them with community notes", which he acknowledged was similar to that of Elon Musk's X (formerly Twitter).
He cited the recent US election, which he said "feel like a cultural tipping point towards, once again, prioritizing speech" over moderation.
9.45am: Stocks open higher
US stocks opened higher on Tuesday, led by further gains for Nvidia as it re-took the crown as largest company from Apple.
With its shares rising another 1.5%, the chipmaker's market cap topped $3.71 trillion, while Apple's shares dropped 0.3% and its valuation eased to just under $3.7 trillion.
The Dow Jones was the index with the largest initial gain, up 0.4%, followed by the S&P 500's and Russell 2000's 0.3% advances and 0.2% for the Nasdaq Composite.
Biggest risers on the S&P was Walgreen Boots Alliance Inc, up 5.4%, followed by Moderna Inc (NASDAQ:MRNA, ETR:0QF) at 5.3%.
Fallers were led by animal health group Zoetis Inc, Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) and Super Micro Computer Inc.
9.20am: Stocks set to climb at the open
US stock futures are now pointing higher than they were initially.
The morning's main macro data showed the US trade deficit widened again to $78.2 billion in November, from $73.6 billion the month before, as imports rebounded 3.4% and exports 2.7%.
Shipments in both directions recovered after the three-day East Coast port strike the month before.
"The deficit could widen even more in the coming months, as importers rush to bring in goods before the incoming Trump administration imposes tariffs," says Paul Ashworth at Capital Economics.
Imports and export prices both dropped, so real goods exports increased 3.4%, with real goods imports up 4.1%.
Nominal services exports increased by almost 1%, with services imports broadly stagnant, offsetting some of the deterioration in the goods trade deficit.
"As things stand now, fourth-quarter growth for real exports of goods and services is tracking at around +0.5% annualised, with growth in real imports close to -1.0%," says Ashworth.
The upshot is that net external trade could end up adding about 0.2% points to overall US GDP growth, he adds, but that is likely to be more than offset by a 0.6% point drag from slower inventory growth.
Overall US GDP should be as high as 2.7% thanks to solid consumption levels.
9am: Quirky tech on show at CES 2025
Alongside the speech from Nvidia boss Jensen Huang that is likely to prove attention-grabbing for investors, there have been plenty of other interesting technological developments at the CES expo.
Quirky highlights, we reckon, are a wearable solar panel and a robo-vacuum cleaner with an arm that can also pick up more bulky waste (and maybe tidy away a dropped sock or two?).
Of course, there are also some AI-powered smart glasses.
7.38am: Flat start for Nasdaq expected, with Nvidia in focus
US stocks are set for a flat start on Tuesday, with further gains expected for Nvidia Corp (NASDAQ:NVDA) offset by falls for Apple Inc (NASDAQ:AAPL) and Tesla Inc (NASDAQ:TSLA).
Futures indicated that the Nasdaq 100 is set to open flat, while S&P 500 and Dow Jones futures both pointed to small gains of around 0.1%.
This follows a mixed session for Wall Street on Monday, with the Nasdaq and the S&P adding 1.2% and 0.55% respectively but the Dow Jones and Russell 2000 falling slightly.
Driving the gains, Nvidia yesterday surged to a new record valuation of $3.66 trillion, helped by an update from Microsoft about its spending on data centres.
CEO Jensen Huang last night turned up the dial on sector excitement with his keynote speech at the CES 2025 conference, announcing a raft of new chips, software and services to accelerate AI adoption in humanoid robots and self-driving cars and trucks.
Ahead of today's opening bell, the chipmaker's shares were up 2.5% pre-market and Apple's were down 1.2%, suggesting Nvidia will re-take the crown for the largest US company.
The move higher for many tech giants dashed hopes of a broadening out of the US stock market rally, with analysts at Deutsche Bank noting that "it was by no means a uniformly rosy picture" on Wall Street as the equal-weighted S&P 500 actually fell 0.05% yesterday, as defensive sectors including utilities (-1.10%) and consumer staples (-0.98%) underperformed.
Market analyst Kathleen Brooks at XTB said: “There was a renewed focus on the AI trade at the start of the week (which) widened the gap between the S&P 500 market weighted index and the equal weighted S&P 500".
She said after Huang's latest update: "It will be worth watching Nvidia’s price action on Tuesday. Will the raft of new products lead to another leg higher in the share price, potentially above $150?
"Some are concerned that tech stocks are too highly valued, however, a forward P/E ratio of 38x earnings is not that high for a tech company, analysts expect earnings and revenues to expand and new products beyond the Blackwell chip could also boost sales down the line. Thus, tech stocks may continue to lead the charge higher in US equity markets as we move through January."