Stocks fell Tuesday as strong economic data raised questions about the possibility of Federal Reserve rate cuts later this year, leading to a spike in Treasury yields. Declines across major tech stocks also dragged the market lower.

The S&P 500 dipped 1.11% to close at 5,909.03. The Dow Jones Industrial Average lost 178.20 points, or 0.42%, and ended at 42,528.36. The Nasdaq Composite slid 1.89% to 19,489.68. The major averages traded higher earlier in the day before rolling over.

Data released Tuesday by the Institute for Supply Management reflected faster-than-expected growth{

ISM services PMI beats expectations, pushes yields higher

The U.S. services sector grew at a faster-than-expected pace in December, raising concern among investors about whether the Fed will be able to cut rates as much as Wall Street hopes, according to the Institute for Supply Management.

The ISM services sector PMI came in at 54.1. Economists polled by Dow Jones expected a print of 53.4. A key driver of that beat was the PMI's price index — which soared 6.2 points to 64.4 — signaling there may be more inflation on the horizon.

— Fred Imbert

Bond yields rose on the data, adding onto the recent climb in yields fueled largely by bets that the incoming administration's tariff plans could boost inflation. The 10-year Treasury yield was last up more than 7 basis points at 4.693% and earlier hit an intraday high of 4.699%, its highest level since April.

"You're getting a recalibration of inflation expectations and Fed rate expectations. That's triggered this small sell-off in the equity markets after the earlier enthusiasm," said Tom Hainlin, senior investment strategist at U.S. Bank Asset Management Group.

Still, Hainlin noted that the ISM number reflects a strong consumer and labor market, which he said ties into a broader picture of strong economic growth that favors corporate earnings growth.

Investors also booked some profits from megacap tech and semiconductor companies after seeing back-to-back gains from the S&P 500 and tech-heavy Nasdaq.

Nvidia shares fell 6.2% after hitting a record. The company on Monday unveiled new chips for desktop and laptop PCs that use the same Blackwell architecture. Tesla slipped 4% after Bank of America downgraded the electric vehicle maker given its high valuation and risks associated with its strategy. Meta Platforms shed nearly 2%, while Apple and Microsoft each dipped more than 1%.

Major U.S. indexes end lower on Tuesday

Stocks ended the trading session in the red, dragged by a decline in megacap tech and strong economic data.

The S&P 500 slid 1.11% to close at 5,909.03. The Nasdaq Composite lost 1.89% to end at 19,489.68. The Dow Jones Industrial Average declined 178.20 points, or 0.42%, to close at 42,528.36.

— Pia Singh

JPMorgan upgrades Robinhood to buy rating on improved legitimacy

JPMorgan is growing more confident on shares of Robinhood.

The bank upgraded the financial services and trading platform to a neutral rating from sell. However, analyst Kenneth Worthington's 12-month price target of $43 implies less than a 1% upside for the stock from its Monday closing price of $42.71.

Shares of Robinhood have already gained 8% this year, adding onto their 192% rally in 2024.

Worthington said that a catalyst for this ratings upgrade was Robinhood's investor day last month.

"Ultimately, we think Robinhood has made notable progress in legitimizing its operations vs. its primary reliance on meme-stock trading 3 years prior," he wrote. "New products like the Gold credit card, retirement match, desktop interface, and derivatives launch may attract more engaged and active — and thus more profitable — users; however, the average account size remains smaller relatively to peers and we question the longer-term profitability opportunity here."

— Lisa Kailai Han

Benchmark calls Huang's Nvidia keynote 'somewhat muted'

While Jensen Huang offered up a "solid" message at his keynote at CES in Las Vegas, Benchmark believes the Nvidia CEO left investors wanting more.

"While Jensen Huang, as expected delivered a broad master-class on the current state and direction of the AI industry, and made several technically interesting announcements that together further extend the company's hardware and software industry leadership, we believe many investors were hoping for more concrete progress updates on the ramp of Blackwell and some input as to the company's progress with its next generation GPU platform, Rubin," wrote Cody Acree.

The analyst called the presentation "somewhat muted," highlighting disappointment in the lack of clarity on Nvidia's Rubin architecture slated for 2026. However, Nvidia did provide insight into its AI leadership capabilities beyond hardware, including its Cosmos platform for building physical AI systems.

Despite the lackluster outlook on future hardware, Acree maintained the firm's $190 price target, reflecting 27% upside from Monday's close. He called the keynote a "strong kick-off" to CES.

Nvidia shares were last down 4%.

— Samantha Subin

UBS says the 'bull market remains intact' this year

Despite expensive valuations, UBS continues to view U.S. equities and artificial intelligence-exposed parts of the market as attractive.

The firm predicts earnings growth to drive another year of "concentrated returns," continuing 2024's 'Mag 7' leadership.

"U.S. equity valuations are higher than average, but historically valuations have had very little correlation with returns over the next 12 months. Instead, profit growth matters more," David Lefkowitz, CIO head of US equities for UBS, wrote in a Monday note to clients. "We think the bull market remains intact driven by solid economic and corporate profit growth."

Lefkowitz expects "healthy" S&P 500 earnings per share growth of 9% this year, remaining bullish on stocks overall even as the firm expects periods of volatility in the year ahead.

— Pia Singh

Bernstein upgrades Lululemon to outperform rating for the first time ever

Bernstein believes that Lululemon has a rosy outlook ahead.

The investment firm upgraded the athleisure retailer to an outperform rating for the first time ever in a Tuesday note. Analyst Aneesha Sherman's price target of $460 corresponds to a potential upside of 16% for the stock.

Shares of Lululemon have added 3.6% so far in 2025 after ending last year 25% lower. Despite this pullback, Sherman is optimistic that Lululemon can turn things around going forward.

"After a tough year of growth deceleration and multiple compression, we believe the Americas business has bottomed and is now set up for a modest recovery," she wrote. "Meanwhile, the China business continues to rapidly grow in the mix, and over the next two years will become a meaningful tailwind to growth and margins."

— Lisa Kailai Han

Four big food companies make new 52-week lows in S&P 500 Tuesday

Four big, high-yielding food companies were among the handful of stocks making new 52-week lows in the S&P 500 Tuesday.

• Campbells (CPB) traded at the lowest since Dec. 2023; yield 3.85%
• General Mills (GIS) touched the lowest Oct. 2023; yield 3.9%
• Mondelez (MDLZ) dropped to the lowest since Oct. 2022; yield 3.2%
• Kraft Heinz (KHC) fell to levels last seen in Nov. 2020; yield 5.3%

— Scott Schnipper, Gina Francolla

Moderna shares jump as bird flu death pushes vaccine options into spotlight

Moderna shares popped nearly 14% on Tuesday after the announcement of a rare human death from bird flu brought focus to vaccine development.

The pharmaceutical company is one of few drugmakers currently developing a vaccine for the disease. The death in December was the first recorded human death from bird flu in the U.S., which currently has more than 60 cases on record.

Moderna shares are now up about 16.7% since 2025 began. That marks a turn after the stock tumbled more than 58% in 2024.

— Alex Harring, Annika Kim Constantino

See the stocks moving midday

These are some of the stocks making notable moves in midday trading:

• UniFirst — The school and work uniform maker jumped 18% after competitor Cintas confirmed it submitted a proposal to acquire the company for $275 per share in cash.
• Aurora Innovation — Shares soared 38.5% after the self-driving technology firm announced a partnership with Nvidia and Continental to roll out driverless trucks.
• Inari Medical — Shares surged 22% after Stryker said it would buy the medical device maker. The transaction is valued at around $4.9 billion, or $80 per share in cash. 

Click here for the full list.

— Alex Harring

Morgan Stanley sees slower ramp-up of GLP-1 drugs near term, but says Eli Lilly is still a top pick

Sales of Eli Lilly's obesity drug Zepbound are rising slower than many investors had hoped, which means the stock is continuing to languish. Once high-flying shares are down nearly 15% over the past three months.

But Morgan Stanley analyst Terence Flynn says Lilly continues to be one of the firm's top picks with a $1,146 price target. That implies huge upside of nearly 50% from where shares closed Monday.

Flynn cut fourth-quarter sales estimates for tirzepatide, the active ingredient in both Zepbound and diabetes drug Mounjaro, but he is standing firm on his 2025 projections. His revenue estimate for the year is 14% above consensus, while his earnings estimate is above the Street by 26%.

"We believe both GLP-1 class growth and [Mounjaro-Zepbound] growth will accelerate more than consensus expects for multiple reasons," he said, citing improved supply, marketing spending, reduced impact from compounding pharmacies and improved insurance coverage as key factors.

— Christina Cheddar Berk

Mid-cap stocks outperform

Mid-cap stocks outperformed Tuesday, after the latest economic data showing sticky inflation spurred a pivot away from large caps.

The Vanguard Mid-Cap ETF (VO) was down slightly, off by 0.1%, compared to the S&P 500's 0.8% drop. In particular, mid-cap value stocks as represented by the Vanguard Mid-Cap Value ETF (VOE) gained 0.6%.

— Sarah Min

ISM services PMI beats expectations, pushes yields higher

The U.S. services sector grew at a faster-than-expected pace in December, raising concern among investors about whether the Fed will be able to cut rates as much as Wall Street hopes, according to the Institute for Supply Management.

The ISM services sector PMI came in at 54.1. Economists polled by Dow Jones expected a print of 53.4. A key driver of that beat was the PMI's price index — which soared 6.2 points to 64.4 — signaling there may be more inflation on the horizon.

— Fred Imbert

Major U.S. indexes open higher

Stocks kicked off Tuesday's trading session in the green, putting the S&P 500 and Nasdaq Composite on track to notch a three-day win streak.

The Dow Jones Industrial Average opened higher by about 179 points, or 0.4%. The S&P 500 added roughly 0.4%, while the tech-heavy Nasdaq jumped 0.3%.

— Pia Singh

QQQ upturn creates 'last stand' for bears, BTIG's Krinksy says

The upswing for stocks in the past few trading days has reached a key technical area, according to BTIG strategist Jonathan Krinsky.

After slumping into year-end, the Invesco QQQ Trust (QQQ) could be on the verge of handing skeptics another loss, Krinsky said in a note to clients.

"QQQ is re-testing its broken trendline from the August lows, but it also appears to have broken the downtrend from recent highs. Betting against the Nasdaq has been futile, but if bears are going to make a stand it's likely from around here," Krinsky said.

The QQQ closed at $524.54 per share on Monday. Its recent trading range stretches from a low of $434.77 in August to a high of $538.17 in December.

— Jesse Pound

Stocks on the move before the bell

These are the stocks making the biggest moves before the bell:

• Nvidia — Shares gained 2.5% after the company announced new gaming chips for PCs utilizing its Blackwell technology at CES in Las Vegas.
• Getty Images, Shutterstock — Shares of the two image databases were soaring after the companies announced a $3.7 billion merger. Getty rose 45%, while Shutterstock added 24%. The new company will keep the Getty name.
• Tesla — The electric vehicle company declined 2% after Bank of America downgraded shares to neutral from buy, citing execution risks and a steep valuation.

Read the full list here.

— Samantha Subin

Getty Images, Shutterstock soar after merger announcement

Getty Images and Shutterstock announced a merger on Tuesday that brings together two digital image databases. Shares of both companies soared in premarket trading.

The combined company will keep the Getty name and be led by Getty Images CEO Craig Peters. Shutterstock shareholders can choose to receive $28.85 per share as part of the deal. Other options include receiving Getty stock or a mix of cash and stock.

Shutterstock rose nearly 30%, while Getty Images rose more than 50%, though the stock is still below $5 per share.

The combined company will have an enterprise value of $3.7 billion, according to the announcement.

— Jesse Pound

UBS upgrades Bank of America, calls it an ‘overlooked’ 2025 winner

Bank of America is an "overlooked" winner for 2025, according to UBS.

UBS analyst Erika Najarian upgraded shares of Bank of America to a buy rating from neutral. To accompany the move, she also lifted her 12-month price target to $53 from $43.

Shares of Bank of America have added 3% in 2025 and ended last year nearly 31% higher. Najarian's updated price target implies that the stock could rise another 17% from its Monday close.

"In the post-election landscape of de-regulation and higher for longer, BAC has been largely left out of the conversation. We think the Street has not yet recalibrated EPS power from higher rates for longer," the analyst wrote, calling its wide discount to peers JPMorgan Chase and Wells Fargo "unjustified."

Notably, Najarian believes that the bank's underlying assumptions to unlock net interest income outperformance are achievable. She also believes that Bank of America is an underrated beneficiary of deregulation.

Similarly, HSBC also upgraded Bank of America stock to a buy rating.

"The recent pullback provides an opportunity to add exposure to a market leader with an attractive earnings and profitability outlook at an attractive valuation," wrote HSBC analyst Saul Martinez.

— Lisa Kailai Han

Japan stocks lead gains in Asia-Pacific markets after tech rally lifts Wall Street

Japan's Nikkei 225 led gains among Asian markets on Tuesday, gaining 1.97% and powered by a tech rally among semiconductor-related stocks.

Most other Asian markets also rose during the session, with the exception of Hong Kong.

The Hang Seng Index was 1.34% down in its final hour of trade, dragged by tech and health-care stocks.

Hong Kong-listed tech stocks are in the spotlight after the U.S. Defense Department added Chinese tech giant Tencent Holdings to a list of firms it calls "Chinese military companies." Tencent's Hong Kong-listed shares are currently down over 7%.

— Lim Hui Jie

Tesla's influence on the stock market is growing, S3 Partners says

The recent increase in the notional value of short interest in Tesla stock, together with heightened volatility in the electrical vehicle maker's shares, "underscores its growing market influence, surpassing both Nvidia and Apple in recent months," according to S3 Partners, a researcher that specializes in tracking Wall Street short interest.

In a typical day, Tesla shares now move up or down in a range of 4.5% compared with its prior volatility of 3% to 4%, according to S3. Nvidia might typically move 3% to 4% each day although, unlike Tesla, its recent volatility has fallen, while Apple only moves 1% or so on an average day.

All three stocks are locked in a three-way race for the highest dollar value of shares sold short, S3 said. "NVDA has had the largest short interest notional position, but AAPL surpassed NVDA for two weeks in December. TSLA has been in third place since mid-year but has now surpassed AAPL," according to the researcher.

— Scott Schnipper

Stocks moving the most in extended trading hours: Inari Medical, Ulta

These are the stocks moving the most in Monday's after-hours trading:

• Inari Medical — Shares of medical device maker Inari Medical surged 22% after Reuters reported that the company was in advanced talks to be acquired by Stryker, citing people familiar with the matter. Sources said that a deal could be announced as early as this week.
• Ulta — The beauty retailer added nearly 2% after increasing its fourth-quarter outlook, citing a stronger-than-expected holiday season. The company also announced that CEO Dave Kimbell will retire after 11 years in the role, to be succeeded by current President and COO Kecia Steelman.

— Lisa Kailai Han

Stock futures open higher

Stock futures traded higher on Monday night.

Dow futures added 48 points, or 0.1%, shortly after 6 p.m. ET. S&P 500 futures and Nasdaq 100 futures respectively gained 0.1% and 0.2%.

— Lisa Kailai Han