Stocks pullback Nasdaq leading the way higher

The major averages climbed off their worst levels going into the close but remained firmly in the red.

The Nasdaq tumbled 375.30 points or 1.9% to 19,489.68, the S&P 500 slumped 66.35 points or 1.1% to 5,909.03 and the Dow fell 178.20 points or 0.4% to 42,528.36.

The Institute for Supply Management released a report showing its reading on U.S. service sector activity increased by more than expected in the month of December. The ISM said its services PMI climbed to 54.1 in December from 52.1 in November, with a reading above 50 indicating growth. Economists had expected the index to rise to 53.3. The report also said the prices index surged to 64.4 in December from 58.2 in November, climbing above 60 for the first time since January 2024. The sharp increase by the index has led to worries services inflation will remain sticky.

Labor Department released a report revealing job openings in the U.S. unexpectedly increased in the month of November. The weakness on Wall Street came amid a slump by shares of Nvidia (NVDA), with the AI darling and market leader plunging by 6.2% and shares of Tesla (TSLA) too tumbled by 4.0% after Bank of America downgraded its rating on the electric vehicle maker's stock to Neutral from Buy.

Software, semiconductor and computer hardware stocks were significantly weak, contributing to the steep drop by the tech-heavy Nasdaq. Retail sales stocks as reflected by the 1.4% loss posted by the Dow Jones U.S. Retail Index. Housing, brokerage and telecom stocks too notably moved upside while airline, oil and gold stocks bucked the downward trend.

Asia-Pacific stocks moved mostly higher on Tuesday. Japan's Nikkei 225 Index surged by 2.0% and China's Shanghai Composite Index advanced by 0.7%, although Hong Kong's Hang Seng Index bucked the uptrend and slumped by 1.2%. Most European stocks moved upside While the U.K.'s FTSE 100 Index edged down by 0.1%, the German DAX Index and the French CAC 40 Index both climbed by 0.6%.

In the bond market, treasuries moved notably lower, extending the downward move seen over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 6.5 basis points to an eight-month closing high of 4.68%.

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