By Caroline Valetkevitch
NEW YORK (Reuters) – World stock indexes were lower while U.S. Treasury yields rose and the U.S. dollar hit its highest in six months on Wednesday after stronger-than-expected U.S. services sector data suggested inflation pressures remain.
The Institute for Supply Management’s (ISM) data showed the non-manufacturing PMI picked up in August, with new orders firming and businesses paying higher prices for inputs.
Some investors said the data may add to signs that interest rates could remain elevated for longer. The U.S. Federal Reserve is still expected to pause in its rate hikes when it meets later this month.
The Nasdaq led declines on Wall Street and technology was down the most of S&P 500 sectors.
Shares of Apple fell 3.2% after the Wall Street Journal reported, citing people familiar with the matter, that China had banned officials at central government agencies from using iPhones and other foreign-branded devices for work.
The Dow Jones Industrial Average fell 212.46 points, or 0.61%, to 34,429.51, the S&P 500 lost 37 points, or 0.82%, to 4,459.83 and the Nasdaq Composite dropped 153.74 points, or 1.1%, to 13,867.21.
The pan-European STOXX 600 index lost 0.59% and MSCI’s gauge of stocks across the globe shed 0.64%.
In other data, manufacturing activity in Germany, Britain and the euro zone declined, while their service sectors fell into contraction territory.
Investors also await the Fed’s “Beige Book” report, due later on Wednesday, for a snapshot of the U.S. economy.
“The two big challenges facing the Fed right now are the risks that inflation could become entrenched and the risks that the consumer could falter when excess savings dry up,” Jeffrey Roach, chief economist at LPL Financial, wrote in a note after the data.
The dollar index rose to a fresh six-month high of 105.03, and was last at 104.95, up 0.2%, with the euro down 0.08% to $1.0711.
In the Treasury market, benchmark 10-year notes were up 3.3 basis points at 4.302%, from 4.268% late on Tuesday.
Oil prices eased. U.S. crude recently fell 0.33% to $86.40 per barrel and Brent was at $89.60, down 0.49% on the day.
(Additional reporting by Gertrude Chavez-Dreyfuss in New York and Nell Mackenzie in London and Kane Wu; Editing by Edmund Klamann, Sam Holmes, Will Dunham and Sharon Singleton)
