In a tumultuous day for American markets, the U.S. stock exchanges experienced a notable downturn on Tuesday, primarily fueled by robust economic data that has raised doubts about potential interest rate cuts by the Federal Reserve later in the yearThe surge in U.STreasury yields acted as a significant catalyst for the decline, prompting investors to reevaluate their positions.

The S&P 500 index fell by 1.11%, closing at 5,909.03 points, while the Dow Jones Industrial Average slid by 178.20 points, ending the day at 42,528.36 points, reflecting a decline of 0.42%. Meanwhile, the Nasdaq Composite index suffered a more substantial drop of 1.89%, landing at 19,489.68 points.

The Institute for Supply Management (ISM) reported on Tuesday that U.S. service sector growth exceeded expectations for DecemberThis data stoked fears regarding potential inflation, complicating the economic outlook as investors had anticipated possible rate reductions by the Fed.

Consequently, bond yields reacted sharply to the economic newsThe yield on the 10-year U.STreasury bond rose by over 7 basis points to reach 4.693%, and earlier in the trading session, it had touched a peak of 4.699%. This marked the highest level seen since AprilThe rally in yields is attributed to investors betting that the new administration's tariff plans could inflate consumer prices, stirring speculation about inflation's trajectory.

Tom Hainlin, a senior investment strategist at U.SBank Asset Management Group, commented on the situation, indicating that "this triggered a slight sell-off in the stock market." Despite the downturn, he emphasized that ISM data reflected strong consumer sentiment and a buoyant job market, which is generally viewed as a positive indicator for corporate profit growth.

Following an era of consistent gains in technology stocks, investor sentiment pivoted towards securing profits from larger tech and semiconductor companiesA significant casualty of this trend was NVIDIA

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After previously hitting an all-time high, NVIDIA's shares plummeted by 6.2%. Earlier, the company had unveiled new chips for desktops and laptops based on the same Blackwell architecture, which had sparked considerable investor enthusiasm.

This stock market shift was primarily driven by profit-takingInvestors, having widely anticipated a surge in demand for artificial intelligence technologies and NVIDIA's leading role in the GPU market, had driven its stock price to spectacular heightsHowever, in light of high valuations, many chose to lock in profits, resulting in a significant downturn in the stock price.

NVIDIA's recently launched next-generation chips, which cover both the desktop and laptop markets, are based on a newly designed architecture following the "Hopper" and "Ada Lovelace" frameworksThis new architecture aims to further enhance performance in AI computing, image processing, and power management, showcasing significant advancements in performance, particularly in multitasking and GPU computing efficiency.

However, despite these impressive innovations, concerns linger about the potential easing of demand in consumer electronics and broader macroeconomic uncertaintiesHence, although technological advancements have garnered praise, the immediate market performance remains susceptible to emotional fluctuations.

In contrast, shares of Tesla saw a dip of 4%. Analysts at U.SBank revised their rating downwards for the electric vehicle manufacturer due to concerns over high valuations and associated risks with its strategic plansAlongside Tesla, major players like Meta Platforms and tech giants Apple and Microsoft also faced declines of nearly 2% and over 1%, respectively.

On the flip side, new insights emerged regarding the Federal Reserve's stanceOn January 6, the S&P 500 index had temporarily surged past the 6,000 mark, inching closer to historical peaksDuring this period, Fed Governor Lisa Cook issued a rare direct warning about the stock market's valuations.

Cook stated, "Numerous asset classes are overvalued, including the stock market and corporate bonds

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