US stocks closed lower Tuesday as traders digested economic data that lowered the likelihood of an imminent Federal Reserve interest rate cut.

Services sector and job openings data pointed to price pressures and a relatively robust labor market.

Given the Fed's dual mandate from Congress to tackle inflation and unemployment, Tuesday's data suggested there is no urgent need to cut interest rates.

"You have some relatively minor numbers today, but they pointed to things that are not at all Fed-friendly: higher prices and a more robust labor economy," Steve Sosnick from Interactive Brokers told AFP.

The Dow Jones Industrial Average fared the best of the three major indices on Wall Street, closing down 0.4 percent at 42,528.36.

The broad-based S&P 500 Index fell 1.1 percent to 5,909.03, while the tech-heavy Nasdaq Composite Index lost 1.9 percent to close at 19,489.68.

While the stock markets fell, yields on US Treasuries rose, with the yield on the popular 10-year US Treasury rising by six basis points to around 4.7 percent on growing fears that President-elect Trump's threats to impose tariffs could prove inflationary.

Over the past 24 hours, futures traders have raised their expectations that the Fed will pause interest rate cuts at its next rate meeting this month, according to data from CME Group.

Among individual companies, chip titan Nvidia plunged 6.2 percent after chief executive Jensen Huang's keynote address at a tech conference failed to impress investors.

But there was good news for pharmaceutical giant Moderna, which jumped 11.7 percent as flu and Covid-19 cases continued to rise across the United States.

Traders are now looking ahead to the release of job data on Wednesday and Friday of this week, which will provide key information on the overall health of the labor market.