Market Jitters as U.S. Economy Shows Unexpected Resilience

Global stocks dipped while U.S. Treasury yields climbed, reflecting a stronger than expected American economy, leading to predictions of fewer Fed rate cuts. Technology and communication service stocks fell, while energy and healthcare rose. European markets posted gains amid changes in U.S. trade outlook.

The global stock market saw a decline, with U.S. Treasury yields rising after economic data underscored an unexpectedly robust American economy. This shift suggests the Federal Reserve may reduce interest rates less frequently this year than previously anticipated. Wall Street witnessed a slump across all its main indexes, with technology, consumer discretionary, and communication services stocks hitting the hardest, while energy and healthcare sectors saw an uptick.

In December, U.S. services sector activities accelerated, surpassing expectations. Prices for inputs reached a near two-year peak, according to the Institute for Supply Management. Moreover, Labor Department figures indicated an unforeseen increase in job openings in November, even though hiring slowed, hinting at a decelerating labor market.

Market forecasts have adjusted, anticipating just one Fed cut in 2025 following recent trends, down from two in December. As bond yields rise, notably the benchmark 10-year Treasury yield reaching an eight-month high, concerns about tariffs and national spending arise. In Europe, stocks maintained gains post-Monday's rally, spurred by potential adjustments to U.S. trade tariffs, boosting automaker shares.

(With inputs from agencies.)