*

US service sector growth picks up in December

*

Micron to provide memory for Nvidia ( NVDA ) gaming chips, shares

up

*

Tesla slips after brokerage downgrade

*

Indexes off: Dow 0.1%, S&P 500 0.69%, Nasdaq 1.44%

(Updates to mid-afternoon trading)

By Johann M Cherian, Sukriti Gupta and Carolina Mandl

Jan 7 (Reuters) - U.S. stocks fell on Tuesday, weighed

by technology stocks after a batch of upbeat economic data

raised concerns that an inflation rebound could slow the pace of

monetary policy easing that the Federal Reserve could pursue

this year.

Stocks gave up early gains after a Labor Department report

showed job openings unexpectedly increased in November, while a

separate report said services sector activity accelerated in

December with a measure tracking input prices surging to a near

two-year high.

"Both of those things potentially have inflationary impacts

and, as a result, yields have increased. That's definitely

weighing on stocks," said Mike Dickson, head of research at

Horizon Investments.

Benchmark 10-year Treasury yields hit an eight-month high at

4.677% after the data pointed to a strong economy.

Signs of continued resilience in the economy have pushed

back expectations on when the central bank can deliver its first

interest rate reduction this year. Traders now see the next cut

more likely in June and the Fed staying on hold for the rest of

2025, according to the CME Group's FedWatch tool.

"Businesses anticipate prices rising further in 2025 as a

result of tariffs," Bill Adams, chief economist for Comerica

Bank, said in a note. "A mix of solid growth and a new wave of

inflationary pressure from tariffs means the Fed will likely

switch from cutting interest rates at every decision ... to

pausing in between rate cuts in 2025."

At 2:04 p.m. EST, the Dow Jones Industrial Average

fell 44.38 points, or 0.10%, to 42,662.04, the S&P 500

lost 41.12 points, or 0.69%, to 5,934.24 and the Nasdaq

Composite lost 285.03 points, or 1.44%, to 19,579.95.

Higher yields pushed technology stocks lower by

1.8%. Shares of AI bellwether Nvidia ( NVDA ) fell 4.87%.

Five of the 11 S&P 500 sectors declined, with consumer

discretionary leading losses with a 1.91% fall. On the

other hand, energy stocks rose 1.67%, tracking higher

crude prices.

The main focus of the week is the key non-farm payrolls

data, along with minutes from the Fed's December meeting.

In the previous session, the S&P 500 and the Nasdaq

closed short of one-week highs on uncertainty after

President-elect Donald Trump denied a report that his team was

exploring less aggressive tariff policies.

Tesla dropped 3.88% after BofA Global Research

downgraded the stock to "neutral" from "buy."

Micron Technology ( MU ) rose 4.1% after Nvidia ( NVDA ) boss Jensen

Huang said the chipmaker was providing memory for the AI

bellwether's GeForce RTX 50 Blackwell family of gaming chips.

Citigroup ( C/PN ) added 2% on bullish coverage from Truist

Securities, while Bank of America ( BAC ) climbed 1.91% after

positive ratings from at least three brokerages. Some big banks

are expected to report their quarterly earnings in the next

week.

Declining issues outnumbered advancers by a 1.69-to-1 ratio

on the NYSE and by a 1.88-to-1 ratio on the Nasdaq.

The S&P 500 posted 9 new 52-week highs and 11 new lows while

the Nasdaq Composite recorded 55 new highs and 49 new lows.

Markets will be shut on Thursday for a national day of

mourning to mark the death of former President Jimmy Carter.