US open: Stocks fall, bond yields rise after strong services data

(Sharecast News) - US stocks started Tuesday session mostly in the red as bond yields rose following data which showed that the services sector expanded more than expected last month while job openings hit a six-month high. The Dow opened more or less flat, trading just 0.05% higher by 1022 ET, but the S&P 500 and Nasdaq dropped 0.29% and 0.79% respectively, pulling back after two days of solid gains.

The closely watched ISM services purchasing managers' index rose to 54.1 in December, up from 52.1 in November and comfortably ahead of the 53.3 consensus forecast. This was the 10th straight month of expanding activity in the sector.

Meanwhile, the number of job openings in the US rose to 8.10m in November, up from 7.84m in October and above the 7.70m expected by the market.

The labour market will be in keen focus this week, with the ADP Employment Report for December on Wednesday, weekly jobless claims on Thursday and the all-important non-farm payrolls figure on Friday.

In other news, the yield on a 10-year US Treasury was up 5 basis points at 4.686% - its highest since April 2024 - ahead of the Treasury's auction of $39bn of 10-year notes at 1800 BST.

Meanwhile, the yield on a 30-year US bond was up 5 basis points at 4.907% - its highest since October 2023 - ahead of a sale of $22bn of 30-year bonds on Wednesday.

"Today and tomorrow's debt auctions in the US are also worth watching closely, in case there are signs of a buyer's strike," said Kathleen Brooks, research director at XTB. "There is also a risk that rapidly rising bond yields could knock equities, and this is seen as one of the key risks for the stock market this year."

Market movers

Shares in Meta Platforms were lower after Mark Zuckerberg announced that he would end fact-checking and restrictions on speech across Facebook and Instagram - a move that comes as the founder and chief executive attempts to form closer relationships with the incoming Trump administration.

"We're going to get back to our roots and focus on reducing mistakes, simplifying our policies and restoring free expression on our platforms," Zuckerberg said in a video.

Getty Images jumped 35% on the news that it is to merge with rival photo agency Shutterstock in a deal worth $3.7bn. In a joint statement, the Wall Street firms said the deal would create a content library with "greater depth and breadth for the benefit of customers [and] expanded opportunities for its contributor community".

US-listed shares of Chinese tech giants Tencent and CATL dropped after the Pentagon added them - among others - to its list of "Chinese military companies".