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US stocks erased earlier gains after two Federal Reserve members said they expected interest rates to exceed 5 percent in 2023, dampening investor hopes for less restrictive monetary policy.

Wall Street’s blue-chip S&P 500, which was up as much as 1.4 percent earlier Monday, closed down 0.1 percent on Monday, with pharmaceutical stocks among the detractors. The tech-heavy Nasdaq Composite, which was up nearly 2.3 percent at one point, closed 0.6 percent higher, while Tesla and chipmakers Nvidia and Advanced Micro Devices were up more than 5 percent.

Both indexes fell in afternoon trade after the US Federal Reserve Governors in San Francisco and Atlanta commented that the fed funds rate must exceed 5 percent to rein in inflation. Atlanta Fed President Raphael Bostic said the rate should stay above that water mark for a “long time.”

Monday’s hawkish comments contrasted with dovish signal traders derived from U.S. government data on Friday that showed average hourly employee wages rose a seasonally adjusted 4.6 percent from a year earlier in December, compared with 4.8 percent in the previous month, easing upward pressure on inflation. The world’s largest economy added 223,000 jobs in the final month of 2022 — more than economists had expected but less than November’s 256,000 surge.

As a result, government bonds rallied, with the yield on two-year Treasury notes, which are sensitive to interest rate expectations, falling nearly a quarter of a point. On Monday, the yield on the note slipped another 0.05 percentage point to 4.20 percent. Bond yields move inversely with prices.

Read more about the market movements of the day.