As headlines frequently showcase monthly employment reports and consumer price indices, investors on Tuesday were reminded of the undeniable significance of the JOLTS report (Job Openings and Labor Turnover Survey) and the Institute for Supply Management (ISM) Services IndexThe day unfolded with a sense of calm across the markets until these two crucial datasets were unveiled, sending shockwaves through financial landscapes, where bond yields surged drastically and stock prices plummeted.

Jose Torres, a senior economist at Interactive Brokers, observed this shift: “The market exhibited stability in the morning, which abruptly changed with the release of two vital economic indicators, triggering a sharp increase in bond yields and a significant sell-off in equities.” This turmoil led to an intense decline in U.STreasury prices, causing yields to rise, reflecting the typical inverse relationship between bond prices and yields

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Specifically, the yield on the 10-year U.STreasury rose by 6.8 basis points to reach 4.684%, marking its highest level since April 25.

Notably, this wave of disheartenment extended across the stock market, with the technology sector bearing the brunt of the impactThe Nasdaq Composite Index, a benchmark for global technology stocks, appeared to be battered by a tempest, descending nearly 1.9%. Major tech companies suffered marked declines in market capitalizationThe Standard & Poor’s 500 Index also did not escape this downturn, sliding approximately 1.1% as key industry giants falteredIn the midst of this turmoil, the historically significant Dow Jones Industrial Average also struggled to maintain its footing, dropping around 178 points as traditional industrial companies encountered substantial pressure.

Within the tech sector, NVIDIA, a prominent AI chip manufacturer, initially began the day on a positive note, with stock prices soaring to an all-time high, seemingly initiating a new chapter of growth

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However, the tide quickly turned, resulting in a drastic 6.2% drop by the close of trading, much to the dismay of investorsIt's worth noting that despite this setback, NVIDIA had managed to accumulate over a 4% gain over the first four trading days of the new year.

Critical to this narrative was the price index component of the ISM Services IndexIn December, it erupted dramatically to a staggering 64.4%, a substantial leap from November's 58.2%. This figure turned heads, reaching its highest point since the beginning of 2023 and becoming a focal point for market analysisThe surge in this metric highlights the significant cost pressures facing the services sectorAs expenses associated with raw material sourcing and labor continue to rise, operational costs for service businesses are soaring, compressing profit margins and presenting immense challenges throughout the industry.

Simultaneously, the November JOLTS report unveiled a notable increase in job openings in the U.S., which rose from 7.8 million in October to 8.1 million, reaching a six-month high

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Louis Navellier, founder of Navellier & Associates, commented on this revelation: “Today’s unexpected rise of the ISM non-manufacturing price index, exceeding expectations, alongside the JOLTS report's significant figures, further contributes to rising interest rates.”

In recent weeks, a barrage of key economic data surfaced, akin to a boulder hurled into a still lake, creating ripples of concern across the market’s surfaceAmong these, fears surrounding “persistent inflation” were reignitedThe inflation data resembled an unpredictable dancer, refusing to comply with market expectations, remaining high and discomforting investors who faced mounting uneaseThis apprehension rapidly spread, significantly undermining prior hopes among investors for interest rate reductions in 2025.

In tracking the data from the CME FedWatch Tool, a stark shift in market sentiment is evident

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Currently, the likelihood of the Federal Reserve maintaining interest rates this month has soared to approximately 95%, compared to Monday’s 91.4% and just 62.9% a month ago—a clear ascent reflecting investor caution regarding immediate monetary policy adjustmentsMoreover, trader expectations have shifted dramatically; a month earlier, the probability of no rate cuts before June next year stood at just 10%, yet that figure has now leaped to 33%, a considerable 23-point increase.

Navellier pointed out, “Today’s economic data propelled the market into a ‘good news is bad news’ conundrumWhile robust employment numbers bode well for GDP and consumer spending, they could also render the Federal Reserve more cautiousConcurrently, rising service prices indicate that inflationary pressure remains sticky; however, moderate inflation can actually favor businesses through enhanced pricing power and profit margins.”

Although medium-term inflation may offer certain beneficial conditions for corporate profits, the current landscape has left investors feeling skittish about the inflated valuations of tech stocks amid rising government bond yields.

Torres remarked, “Tuesday’s economic data suggests that the U.S