A separate report, meanwhile, showed the US job market remains solid despite high interest rates. Fewer workers applied for unemployment benefits last week than economists expected, an indication that layoffs remain low.

Treasury yields had been close to flat following the joblessness report but turned higher immediately after the report on business activity, which also suggested upward pressure on selling prices remains stubbornly high.

A hotter-than-expected economy could push the Federal Reserve to wait longer before cutting interest rates, after traders already ratcheted back their earlier, too-optimistic forecasts. What’s worse, it could force the Federal Reserve to ultimately raise rates more and cause a deep recession to get inflation to fully succumb.

Hopes are still high for at least one cut to rates this year. But traders pulled back on some of those bets following Thursday’s reports.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans, rose to 4.47 per cent from 4.43 per cent late Wednesday. The two-year yield, which more closely tracks expectations for action by the Federal Reserve, climbed to 4.93 per cent from 4.87 per cent.

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The sharpest single drop within the S&P 500 came from Live Nation Entertainment, which tumbled 7.8 per cent after the Justice Department accused it and its Ticketmaster business of running an illegal monopoly over live events in the country.

AI giant Nvidia leapt 9.3 per cent leap for Nvidia, after it delivered its latest knockout profit report late on Wednesday. Its revenue surged 262 per cent in the latest quarter from a year earlier, and its profit leaped an eye-popping 629 per cent. The company’s chips are helping to train artificial-intelligence systems, and demand for them has been voracious.

Nvidia also increased its dividend as its CEO, Jensen Huang, touted how “the next industrial revolution has begun.”

With AP