STORY: U.S. stocks ended lower on Monday, as investors were spooked by better-than-expected data from the services sector and re-evaluated whether the Federal Reserve could hike interest rates for longer than expected.
The Dow fell 1.4%, the S&P lost nearly 1.79% and the Nasdaq dropped more than 1.93%.
Data showed activity in the U.S. services industry unexpectedly picked up in November, with employment rebounding, offering more evidence of underlying momentum in the economy – not what the Fed wants when it’s trying to slow the economy in order to cool inflation.
Anna Rathbun is Chief Investment Officer at CBIZ Investment Advisory Services.
"Those data include better than expected factory orders, durable goods, and in particular, the ISM Service Index came in very strong. And in the service index we had details like sticky prices on the prices paid side and a very strong employment subindex -- the two very things that go against the Fed pivot narrative. This is really interesting because Chairman Powell was very hawkish last week and the markets actually didn't interpret it that way. They were cherry picking the 50-basis point signal and markets went up. Well, today, it's a little bit more sober."
As for individual movers, Tesla slumped 6.4% on plans to cut December output of the Model Y at its Shanghai plant by more than 20% from the previous month.
And apparel maker VF Corp dropped 11.2% - its largest one-day decline since March 2020 - after announcing the sudden retirement of its CEO. The firm, which owns names including outdoor wear brand The North Face and sneaker maker Vans, also cut its full-year sales and profit forecasts, blaming weaker-than-anticipated consumer demand.