Stocks lose ground, US yields rise after strong US data

NEW YORK/LONDON: Global stocks lost groundwhile US Treasury yields edged higher on Tuesday after data showed the American economy remained resilient.

US services sector activity accelerated in December, beating expectations, while a measure of prices paid for inputs rose to near a two-year high, according to data from the Institute for Supply Management.

Labor Department data also showed US job openings unexpectedly increased in November although a softening in hiring pointed to a slowing labor market.

On Wall Street, all three main indexes were trading lower, with consumer discretionary, technology and communication services stocks among the biggest losers. Energy, healthcare and materials stocks were advancing.

European stocks held their gains after rallying on Monday following a report saying President-elect Donald Trump’s aides are considering narrower tariffs than previously thought.

“The Trump trade has taken a bit of a breather right now because bond yields have been rising,” said Wasif Latif, chief investment officer at Sarmaya Partners in New York. “I think the market is beginning to take note that between tariffs and the deficit that there’s question marks about how we’re going to be able to lower the deficit with all this promised spending coming in terms of tax cuts and other things the new administration wants to implement.”

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The Dow Jones Industrial Average .DJI fell 0.10%, to 42,663.38, the S&P 500 .SPX fell 0.74% to 5,931.30 and the Nasdaq Composite .IXIC fell 1.50%, to 19,566.71.

The European STOXX 600 index .STOXX rose 0.32% for the second consecutive day of gains. It rose 0.95% on Monday following the report on tariffs, which caused shares of automakers to rally. MSCI’s gauge of stocks across the globe .MIWD00000PUS fell 0.44% to 849.16.

Benchmark 10-year Treasury yields hit an eight-month high, buoyed by data showing the US economy remained strong. The yield on 10-year notes US10YT=RR rose 6.9 basis points to 4.685%, having peaked at 4.699%, the highest since April 26.

“The 10-year continues to inch higher and the equity market hasn’t picked up on the fact that bond yields are rising, and rising long-term yields is not good for equities,” Latif added.

The dollar index =USD, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.12% to 108.44, with the euro EUR= down 0.22% at $1.0367.

The greenback rose to a near six-month peak against the Japanese yen after the US data. It was up 0.1% at 157.740 yen JPY=EBS. Earlier in the global session, the dollar hit its highest since July at 158.425 yen.

Oil prices gained, driven by concerns over tighter supply from Russia and Iran because of Western sanctions and expected higher Chinese demand.

Brent crude LCOc1 futures advanced 0.89% to $76.98 a barrel while US West Texas Intermediate crude CLc1 was up 0.87% at $74.19.

Gold prices gained. Spot gold XAU= rose 0.66% to $2,652.80 an ounce. US gold futures GCc1 rose 0.72% to $2,657.50 an ounce.