10-Year Treasury Hits 8-Month High On Job Openings, ISM Services Data; S&P 500 Falls

The 10-year Treasury yield hit the highest level since April after reports showing U.S. service-sector activity heating up in December and an job openings rising unexpectedly the prior month. After the strong data, the S&P 500 edged lower as investors weighed the implications for the Federal Reserve rate-cut outlook.

As long as the economy is on firm footing, the Fed may be reluctant to further cut interest rates amid a huge amount of uncertainty over President-elect Donald Trump's agenda, including tax cuts, tariffs, deregulation and deportations.

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Job Openings

Job openings rose to 8.098 million from an upwardly revised 7.839 million in October. Economists expected 7.65 million, down slightly from the initially reported 7.744 million. Job openings hit the highest level since May.

Apart from the headline increase in job openings, the report offered little cause for concern on the inflation front. The quits rate, the percentage of workers leaving their jobs each month for greener pastures, fell back to 1.9% in November, which matched September's four-year low. Fewer quits takes pressure off of employers to raise wages.

ISM Services

The Institute for Supply Management gauge of U.S. service sector activity rose to a very solid 54.1 from 52.1 in November, topping 53.2 forecasts. Readings above 50 indicate expansion.

The employment subindex inched down to 51.4 from 51.5, suggesting a moderate pace of private-sector job gains.

Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, highlighted a 6.2-point jump in the service prices index to 64.4, the highest since February 2023. "This index has typically provided a reliable lead on underlying services inflation over the past decade or two," Tombs wrote. However, he cautioned putting much weight on one month's data point because index readings can be volatile.

S&P 500

The S&P 500 lost 0.3% in Thursday morning stock market action, but pared losses as the 10-year Treasury yield climbed eased back after touching 4.7%.

After rising 0.55% on Monday, the S&P 500 stood within 2% of its Dec. 6 all-time closing high.

As of now, the 10-year yield is at 4.67%, up five basis points on the day.

Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.

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