US STOCKS-S&P 500, Nasdaq decline as US yields remain elevated

Updates to afternoon U.S. trading

By Chuck Mikolajczak

NEW YORK, Jan 13 (Reuters) - The S&P 500 and Nasdaq fell on Monday, with the benchmark S&P 500 index hitting a two-month low as U.S. Treasury yields stayed elevated with investors scaling back expectations on the pace of rate cuts from the Federal Reserve.

Equities have struggled, with the S&P 500 down in four of the past five weeks as economic data indicated a resilient economy with nagging price pressures. Comments from Fed officials have pushed bond yields higher.

Promised tariffs from President-elect Donald Trump have also fueled worries about inflation.

Treasury yields edged higher , with the benchmark 10-year note yield US10YT=RR touching a 14-month high of 4.805% and was last up 0.2 basis point to 4.776%.

Markets are pricing in about 27 basis points of cuts from the Fed this year, with a 52.9% chance for a June cut.

"There's concern that we're going to see higher inflation numbers, I'm not so sure that's positively the case, but that's sort of the concern here and that it's going to be a while before we see lower rates again," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

"The inflation issue is out there and higher yields in general aren't great for either the bond market or really the stock market. You do have out there as well, Jan. 21st coming up and you know and we'll see what the new administration does."

The Dow Jones Industrial Average .DJI rose 299.81 points, or 0.71%, to 42,238.26, the S&P 500 .SPX fell 4.59 points, or 0.08%, to 5,822.26 and the Nasdaq Composite .IXIC fell 133.93 points, or 0.70%, to 19,027.70.

The domestically sensitive Russell 2000 index .RUT declined 0.9% to its lowest level since September 2024, extending Friday's decline which pushed it into correction territory after falling more than 10% from its November intraday record high.

The Dow moved higher, buoyed by a 4.3% gain in UnitedHealth Group UNH.N after President Joe Biden's administration proposed 2026 reimbursement rates for Medicare Advantage plans run by private insurers, which would result in a 2.2% increase in payments.

CVS Health CVS.N and Humana HUM.N both jumped about 7% as the S&P 500 health care sector rose 1.3%.

Utilities .SPLRCU and tech .SPLRCT led decliners, both down by more than 1%. Edison International EIX.N tumbled more than 11% after Bloomberg News reported the southern California utility was hit with a lawsuit blaming the company's equipment for igniting one of the wildfires consuming parts of the state.

Energy .SPNY climbed 2.4%, the best performing of the 11 major S&P sectors as crude prices continued their recent climb on expectations that U.S. wider sanctions on Russian oil would force buyers in India and China to other suppliers.

The Consumer Price Index numbers and the central bank's Beige Book on economic activity, both due on Wednesday, will likely help shape views on the Fed's policy outlook.

Chip stocks were mostly lower, with Nvidia NVDA.O off 3.1% and Micron Tech down 4.8% after the U.S. government said it would further restrict artificial-intelligence chip and technology exports. The PHLX semiconductor index .SOX lost 0.9%.

Moderna MRNA.O plummeted more than 20% as the worst performer on the S&P 500 after slashing its 2025 sales forecast by $1 billion.

Declining issues outnumbered advancers by a 1.4-to-1 ratio on the NYSE, and by a 1.79-to-1 ratio on the Nasdaq.

The S&P 500 posted two new 52-week highs and 23 new lows, while the Nasdaq Composite recorded 20 new highs and 238 new lows.

(Reporting by Chuck Mikolajczak, additional reporting by Johann M Cherian and Sukriti Gupta in Bengaluru; Editing by David Gregorio)

((charles.mikolajczak@tr.com; @ChuckMik;))