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Nasdaq ends lower, S&P 500 ends up slightly

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Investors lower expectations on Fed easing in 2025

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Market watchers await US CPI data, due Wednesday

(Updates with closing US market levels)

By Caroline Valetkevitch

NEW YORK, Jan 13 (Reuters) -

Stock indexes mostly dipped on Monday, while U.S. Treasury

10-year yields touched 14-month highs as a resilient US economy

and persistent inflation prompted investors to weigh the

possibility that the Federal Reserve may pause its easing cycle.

The U.S. dollar index hit its highest level in more than

two years. The

Nasdaq fell

, while the benchmark S&P 500 bounced off a two-month low to

finish with a slight gain.

Investors anxiously await Wednesday's U.S. Consumer Price

Index reading. Any upside surprises could feed fears that the

Fed may pause its rate cuts. A Reuters poll of economists gives

a median forecast for an annual rise of 2.9%, up from November's

2.7%, and for a monthly increase of 0.3%.

U.S. producer prices data is due on Tuesday.

On Friday, the December employment report showed 256,000

workers were added to U.S. nonfarm payrolls, the biggest

increase since March and well above expectations for a rise of

160,000.

Investors also worry whether inflation could pick up as a

result of policies on tariffs, migration and taxes of U.S.

President-elect Donald Trump's incoming administration.

Markets are pricing in about 27 basis points of cuts from

the Fed this year, with a 52.9% chance for a June cut.

"It'll be touch and go for the next couple of days until we

get the inflation news out of the way," said Peter Cardillo,

chief market economist at Spartan Capital Securities in New

York.

"The Fed has become more hawkish at this time," and

investors are considering the possibility that the U.S. may have

seen the end of rate cuts for now, Cardillo added.

The next Fed policy meeting is scheduled for Jan. 28-29.

The benchmark 10-year note yield touched a

14-month high of 4.805% and was last up 1.6 basis points at

4.79%.

On Wall Street, the Dow Jones Industrial Average rose

358.67 points, or 0.86%, to 42,297.12, the S&P 500 rose

9.18 points, or 0.16%, to 5,836.22 and the Nasdaq Composite

fell 73.53 points, or 0.38%, to 19,088.10.

MSCI's gauge of stocks across the globe

also fell 2.07 points, or 0.25%, to 831.79. The STOXX 600

index dropped 0.55%.

The fourth-quarter U.S. earnings reporting season also gets

under way this week with results expected from some of the

biggest U.S. banks including JPMorgan Chase ( JPM ).

"The question investors are grappling with is what's more

important - strong corporate earnings, which come from a strong

economy, or lower inflation, which comes from a weaker economy,"

said Oliver Pursche, senior vice president, advisor for

Wealthspire Advisors in Westport, Connecticut.

"Most investors would prefer a strong economy with

slightly elevated inflation," he said.

Helping both the Dow and S&P 500 was a 3.9% gain in

UnitedHealth Group ( UNH ) shares, 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.

The dollar index, which measures the greenback against a

basket of currencies, rose 0.26% to 109.94. Earlier in the

session it rose to its highest in more than two years, peaking

at 110.17 and adding to its recent rally.

The euro was down 0.23% at $1.022. Against the

Japanese yen, the dollar weakened 0.03% to

157.64.

A jump in energy prices added to investor unease over

inflation.

Oil prices climbed about 2% to a four-month high as

traders expected wider U.S. sanctions on Russian oil would force

buyers in India and China to seek other suppliers.

U.S. crude rose $2.25 to settle at $78.82 a barrel

and Brent rose to $1.25 to settle at $81.01.

With the dollar gaining, gold fell 0.9% to $2,664.49

per ounce. Gold generally struggles to compete for investor cash

in a high-yield, high-dollar environment.