Tue Jan 07 15:40:00 UTC 2025: ## Market Volatility After Strong Services Data; Tech Stocks Mixed

**New York, NY** – Wall Street experienced a mixed session on Tuesday, with the S&P 500 dipping 0.3% after initially gaining ground. The Dow Jones Industrial Average bucked the trend, rising slightly by 0.2%, while the Nasdaq Composite fell 1%. The volatility followed the release of stronger-than-expected data on the U.S. services sector, fueling concerns about persistent inflation and impacting Federal Reserve rate cut expectations.

The Institute for Supply Management’s (ISM) services PMI for December clocked in at 54.1, exceeding analyst predictions of 53.4. A significant contributor was a surge in the PMI’s price index, jumping 6.2 points to 64.4, suggesting inflation may remain sticky. This led to a rise in Treasury yields, with the 10-year yield increasing by nearly six basis points to 4.675%.

Tom Hainlin, senior investment strategist at U.S. Bank Asset Management Group, attributed the market sell-off to a recalibration of inflation and Fed rate expectations. However, he also highlighted the strong consumer and labor market reflected in the ISM data, suggesting continued economic growth and potential for corporate earnings growth.

The tech sector showed mixed performance. Nvidia shares fell over 4.5% following the unveiling of new chips, while Tesla dropped nearly 3% after a Bank of America downgrade. Other megacap tech stocks like Meta Platforms and Amazon also experienced declines.

In contrast, mid-cap stocks outperformed large-caps, with the Vanguard Mid-Cap Value ETF (VOE) gaining 0.6%. This shift suggests investors are moving away from large-cap tech in response to inflation concerns.

Despite the day’s volatility, the market showed some resilience. Earlier in the session, stocks opened higher, fueled by gains in semiconductor companies. Furthermore, a merger announcement between Getty Images and Shutterstock sent both companies’ shares soaring in pre-market trading. Bank of America also received upgrades from UBS and HSBC, citing its potential for growth in a changing regulatory landscape.

Asian markets saw a more positive trend, with Japan’s Nikkei 225 leading the gains, driven by a rally in semiconductor stocks. However, the Hang Seng Index fell, impacted by declines in tech and healthcare stocks, particularly after Tencent was added to a U.S. Defense Department list of Chinese military companies.

Finally, the increased volatility in Tesla’s stock price is noteworthy, with the company’s daily price swings surpassing those of Nvidia and Apple, according to S3 Partners. This reflects Tesla’s growing market influence and increased short interest.

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