Stock market today: Wall Street slumps as good news for the economy is once again bad for stocks

NEW YORK (AP) — Good news on the U.S. economy is back to being bad for Wall Street, and the stock market slumped Tuesday following better-than-expected reports on the job market and business activity.

The S&P 500 fell 1.1% after giving up an early gain. The Dow Jones Industrial Average dropped 178 points, or 0.4%, while the Nasdaq composite tumbled 1.9%.

Stocks dropped under the weight of rising yields in the bond market, which jumped immediately after the release of the encouraging reports on the economy. One said U.S. employers were advertising more job openings at the end of November than economists expected. The other said activity for finance, retail and other services businesses grew much faster in December than expected.

The strong reports are of course good news for workers looking for jobs and for anyone worried about a possible recession that earlier seemed inevitable to pessimists. But such a solid economy could also keep up pressure on inflation, and it could make the Federal Reserve less likely to deliver the cuts to interest rates that Wall Street loves.

The Fed began cutting its main interest rate in September to give the economy a boost, but it’s hinted a slowdown in easing is coming. The threat of tariffs from President-elect Donald Trump has raised worries about possible upward pressure on inflation, which has stubbornly remained just above the Fed’s 2% target.

Tuesday’s report on U.S. services industries from the Institute for Supply Management also contained discouraging trends on inflation, saying price increases accelerated in December.

Expectations for fewer cuts to interest rates in 2025 had already been building for weeks, which sent longer-term Treasury yields upward. So have worries about other possible Trump policies, such as tax cuts, which could swell the U.S. government’s debt and likewise push yields higher.

Those higher yields make Treasury bonds more attractive to investors who might otherwise buy stocks, which in turn puts downward pressure on stock prices, and the super-safe bonds are paying notably more. The yield on a 10-year Treasury climbed to 4.69% from 4.63% shortly before the release of Tuesday’s reports and from just 4.15% in early December.

High yields can put heavy pressure on stocks seen as the most expensive, which pulls the lens toward Nvidia and other Big Tech stocks that have soared in the frenzy around artificial-intelligence technology.

Nvidia had been on track to set another all-time high in morning trading, after CEO Jensen Huang unveiled a suite of new products and partnerships the night before. He talked up the potential for AI technology in robotics, among other opportunities for big growth.

But after Tuesday morning's economic reports, which hit the market after its first half hour of trading, Nvidia swung to a loss of 6.2% and became the heaviest weight on the S&P 500. Losses for Amazon, Tesla, Apple and Microsoft were the next-strongest forces dragging the index lower.

Now that worries from the summer about a potentially slowing U.S. economy have abated and the 10-year Treasury yield is firmly above 4.50%, “we believe the market is shifting into a ‘good news is bad news’ environment again,” according to Bank of America strategists led by Ohsung Kwon.

That raises the stakes for Friday’s coming update on the U.S. job market, which economists expect will show a slowdown in overall hiring. They’re looking for growth of 156,500 jobs in December, according to FactSet.

A “Goldilocks” reading for the U.S. stock market that would be solid but not too strong for the Fed would likely be in the 125,000 to 175,000 range, along with an unemployment rate of 4.2%, according to Bank of America.

Helping to keep Tuesday’s losses for U.S. stock indexes in check was Cintas, which rose 2% after making public its offer to buy its smaller rival, UniFirst, for $275 per share in cash.

Cintas said it first made that offer in November but has been unable to get UniFirst’s board to meet. UniFirst had rejected an earlier offer of $255 per share, said Cintas, which provides uniforms, restroom supplies, fire extinguishers and other products to businesses.

UniFirst jumped 20.9% to $204.69, below Cintas’ offer price.

Elsewhere on Wall Street, Shutterstock and Getty climbed after they announced they were joining to become a $3.7 billion visual content company to provide customers with a broader array of still imagery, video, music, 3D and other media.

Getty Images shareholders will own a slight majority of the combined company. Getty shares jumped 24.1%, while Shutterstock climbed 14.8%.

All told, the S&P 500 fell 66.35 points to 5,909.03. The Dow Jones Industrial Average slipped 178.20 to 42,528.36, and the Nasdaq composite sank 375.30 to 19,489.68.

In stock markets abroad, some notable Chinese companies fell after the U.S. Defense Department added dozens of them to a list of companies it says have ties to China’s military. The announcement caused some of the companies to protest and say they will seek to have the decision reversed.

Added to the list were gaming and technology company Tencent, artificial intelligence firm SenseTime and the world’s biggest battery maker CATL. Tencent’s stock that trades in Hong Kong fell 7.3%.

That helped pull the Hang Seng index down 1.2%, but indexes were stronger elsewhere in China and across much of Asia and Europe.

AP Business Writers Yuri Kageyama and Matt Ott contributed.

Traders work on the floor at the New York Stock Exchange in New York's Financial District Thursday, Jan. 2, 2025. (AP Photo/Seth Wenig)

Stock price board is seen after a ceremony marking the start of this year's trading Tokyo Stock Exchange Monday, Jan. 6, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)

A trader works on the floor at the New York Stock Exchange in New York's Financial District Thursday, Jan. 2, 2025. (AP Photo/Seth Wenig)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 7, 2025. (AP Photo/Ahn Young-joon)

A currency trader passes by a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 7, 2025. (AP Photo/Ahn Young-joon)

A currency trader works near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 7, 2025. (AP Photo/Ahn Young-joon)

U.S. President Donald Trump says Iran has proposed negotiations after his threat to strike the Islamic Republic as an ongoing crackdown on demonstrators has led to hundreds of deaths.

Trump said late Sunday that his administration was in talks to set up a meeting with Tehran, but cautioned that he may have to act first as reports mount of increasing deaths and the government continues to arrest protesters.

“The meeting is being set up, but we may have to act because of what’s happening before the meeting. But a meeting is being set up. Iran called, they want to negotiate,” Trump told reporters on Air Force One on Sunday night.

Iran did not acknowledge Trump’s comments immediately. It has previously warned the U.S. military and Israel would be “legitimate targets” if America uses force to protect demonstrators.

The U.S.-based Human Rights Activists News Agency, which has accurately reported on past unrest in Iran, gave the death toll. It relies on supporters in Iran cross checking information. It said at least 544 people have been killed so far, including 496 protesters and 48 people from the security forces. It said more than 10,600 people also have been detained over the two weeks of protests.

With the internet down in Iran and phone lines cut off, gauging the demonstrations from abroad has grown more difficult. Iran’s government has not offered overall casualty figures.

The Latest:

A witness told the AP that the streets of Tehran empty at the sunset call to prayers each night.

Part of that stems from the fear of getting caught in the crackdown. Police sent the public a text message that warned: “Given the presence of terrorist groups and armed individuals in some gatherings last night and their plans to cause death, and the firm decision to not tolerate any appeasement and to deal decisively with the rioters, families are strongly advised to take care of their youth and teenagers.”

Another text, addressed “Dear parents,” which claimed to come from the intelligence arm of the paramilitary Revolutionary Guard, also directly warned people not to take part in demonstrations.

The witness spoke to the AP on condition of anonymity due to the ongoing crackdown.

—- By Jon Gambrell in Dubai, United Arab Emirates

Iran drew tens of thousands of pro-government demonstrators to the streets Monday in a show of power after nationwide protests challenging the country’s theocracy.

Iranian state television showed images of demonstrators thronging Tehran toward Enghelab Square in the capital.

It called the demonstration an “Iranian uprising against American-Zionist terrorism,” without addressing the underlying anger in the country over the nation’s ailing economy. That sparked the protests over two weeks ago.

State television aired images of such demonstrations around the country, trying to signal it had overcome the protests, as claimed by Iranian Foreign Minister Abbas Araghchi earlier in the day.

China says it opposes the use of force in international relations and expressed hope the Iranian government and people are “able to overcome the current difficulties and maintain national stability.”

Chinese Foreign Ministry spokesperson Mao Ning said Monday that Beijing “always opposes interference in other countries’ internal affairs, maintains that the sovereignty and security of all countries should be fully protected under international law, and opposes the use or threat of use of force in international relations.”

German Chancellor Friedrich Merz condemned “in the strongest terms the violence that the leadership in Iran is directing against its own people.”

He said it was a sign of weakness rather than strength, adding that “this violence must end.”

Merz said during a visit to India that the demonstrators deserve “the greatest respect” for the courage with which “they are resisting the disproportional, brutal violence of Iranian security forces.”

He said: “I call on the Iranian leadership to protect its population rather than threatening it.”

Iran’s Foreign Ministry spokesman on Monday suggested that a channel remained open with the United States.

Esmail Baghaei made the comment during a news conference in Tehran.

“It is open and whenever needed, through that channel, the necessary messages are exchanged,” he said.

However, Baghaei said such talks needed to be “based on the acceptance of mutual interests and concerns, not a negotiation that is one-sided, unilateral and based on dictation.”

The semiofficial Fars news agency in Iran, which is close to the paramilitary Revolutionary Guard, on Monday began calling out Iranian celebrities and leaders on social media who have expressed support for the protests over the past two weeks, especially before the internet was shut down.

The threat comes as writers and other cultural leaders were targeted even before protests. The news agency highlighted specific celebrities who posted in solidarity with the protesters and scolded them for not condemning vandalism and destruction to public property or the deaths of security forces killed during clashes. The news agency accused those celebrities and leaders of inciting riots by expressing their support.

Canada said it “stands with the brave people of Iran” in a statement on social media that strongly condemned the killing of protesters during widespread protests that have rocked the country over the past two weeks.

“The Iranian regime must halt its horrific repression and intimidation and respect the human rights of its citizens,” Canada’s government said on Monday.

Iran’s foreign minister claimed Monday that “the situation has come under total control” after a bloody crackdown on nationwide protests in the country.

Abbas Araghchi offered no evidence for his claim.

Araghchi spoke to foreign diplomats in Tehran. The Qatar-funded Al Jazeera satellite news network, which has been allowed to work despite the internet being cut off in the country, carried his remarks.

Iran’s foreign minister alleged Monday that nationwide protests in his nation “turned violent and bloody to give an excuse” for U.S. President Donald Trump to intervene.

Abbas Araghchi offered no evidence for his claim, which comes after over 500 have been reported killed by activists -- the vast majority coming from demonstrators.

Araghchi spoke to foreign diplomats in Tehran. The Qatar-funded Al Jazeera satellite news network, which has been allowed to work despite the internet being cut off in the country, carried his remarks.

Iran has summoned the British ambassador over protesters twice taking down the Iranian flag at their embassy in London.

Iranian state television also said Monday that it complained about “certain terrorist organization that, under the guise of media, spread lies and promote violence and terrorism.” The United Kingdom is home to offices of the BBC’s Persian service and Iran International, both which long have been targeted by Iran.

A huge crowd of demonstrators, some waving the flag of Iran, gathered Sunday afternoon along Veteran Avenue in LA’s Westwood neighborhood to protest against the Iranian government. Police eventually issued a dispersal order, and by early evening only about a hundred protesters were still in the area, ABC7 reported.

Los Angeles is home to the largest Iranian community outside of Iran.

Los Angeles police responded Sunday after somebody drove a U-Haul box truck down a street crowded with the the demonstrators, causing protesters to scramble out of the way and then run after the speeding vehicle to try to attack the driver. A police statement said one person was hit by the truck but nobody was seriously hurt.

The driver, a man who was not identified, was detained “pending further investigation,” police said in a statement Sunday evening.

Shiite Muslims hold placards and chant slogans during a protest against the U.S. and show solidarity with Iran in Lahore, Pakistan, Sunday, Jan. 11, 2026. (AP Photo/K.M. Chaudary)

Activists carrying a photograph of Reza Pahlavi take part in a rally supporting protesters in Iran at Lafayette Park, across from the White House, in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)

Activists take part in a rally supporting protesters in Iran at Lafayette Park, across from the White House in Washington, Sunday, Jan. 11, 2026. (AP Photo/Jose Luis Magana)

Protesters burn the Iranian national flag during a rally in support of the nationwide mass demonstrations in Iran against the government in Paris, Sunday, Jan. 11, 2026. (AP Photo/Michel Euler)