Austrian far right gets mandate to try to lead a government for the first time since World War II

VIENNA (AP) — The leader of Austria's Freedom Party received a mandate Monday to try to form a new government, which would be the first headed by the far right since World War II if he succeeds.

The anti-immigration and euroskeptic Freedom Party, which opposes sanctions against Russia and is led by Herbert Kickl, won Austria’s parliamentary election in September. It took 28.8% of the vote and beat outgoing Chancellor Karl Nehammer’s conservative Austrian People’s Party into second place.

But in October, President Alexander Van der Bellen gave Nehammer the first chance to form a new government after Nehammer’s party said it wouldn’t go into government with the Freedom Party under Kickl and others refused to work with the Freedom Party at all. Those efforts to form a governing alliance without the far right collapsed in the first few days of the new year and Nehammer said Saturday that he would resign.

The People’s Party then signaled that it might be open to working under Kickl. Van der Bellen said after meeting Kickl for about an hour at the presidential palace Monday that he had tasked the Freedom Party leader with holding talks with the People’s Party to form a new government.

“I did not take this step lightly,” the president told reporters. “I will continue to take care that the principles and rules of our constitution are correctly respected and adhered to.”

The far right and the conservatives have governed together before, but on previous occasions with the Freedom Party as the junior partner. Most recently, they ran Austria from 2017 to 2019 in a government in which Kickl — a 56-year-old with a taste for provocation — served as interior minister. It collapsed in a scandal surrounding the Freedom Party’s leader at the time.

Coalition talks between the far right and conservatives aren’t guaranteed to succeed, but there are no longer any other realistic options in the current parliament and polls suggest that a new election soon could strengthen the Freedom Party further.

In its election program titled “Fortress Austria,” the Freedom Party has called for the “remigration of uninvited foreigners,” for achieving a more “homogeneous” nation by tightly controlling borders and suspending the right to asylum via an emergency law.

The Freedom Party also calls for an end to sanctions against Russia, is highly critical of Western military aid to Ukraine and wants to bow out of the European Sky Shield Initiative, a missile defense project launched by Germany. Kickl has criticized “elites” in Brussels and called for some powers to be brought back from the European Union to Austria.

The Freedom Party is part of a right-wing populist alliance in the European Parliament, Patriots for Europe, which also includes the parties of Hungarian Prime Minister Viktor Orbán and of the Netherlands’ Geert Wilders, whose party dominates the Netherlands’ new government,

Van der Bellen noted that the new government won't face an easy task.

“The economic environment is difficult. Austria is in a persistent recession, unemployment is rising; at the same time our state budget must be restructured,” he said. “It’s not likely that all the measures will be popular, but they will have to be implemented.”

He also pointed to the geopolitical threats Austria faces, particularly as a result of Russia’s war in Ukraine, and pointed to the importance of “constructively strengthening European cooperation in the Union, also in the interest of Austrian industry and exporters.”

And the head of state, a liberal who originally hails from the environmentalist Greens, said that he and Kickl had discussed media freedom in Austria at length.

Kickl is confident of finding “viable solutions” in coalition talks, “and he wants this responsibility,” the president said.

Kickl strode past reporters without commenting as he left the meeting.

Around 200-300 demonstrators gathered outside the presidential palace as he spoke with Van der Bellen.

“We don’t want to wake in a fascist country. We also don’t want to wake up in an authoritarian system like in Hungary," protester Martin Fuchs said. "We want to maintain democracy in Austria and strengthen it.”

Moulson reported from Berlin.

Austria's Freedom Party leader Herbert Kickl leaves the presidential office, in Vienna, Austria, Monday, Jan. 6, 2025. (AP Photo/Heinz-Peter Bader)

Head of the Freedom Party (FPOe) Herbert Kickl leaves the presidential office, in Vienna, Austria, Monday, Jan. 06, 2025. (AP Photo/Heinz-Peter Bader)

Austria's Freedom Party leader Herbert Kickl leaves the presidential office, in Vienna, Austria, Monday, Jan. 06, 2025. (AP Photo/Heinz-Peter Bader)

Austrian President Alexander Van der Bellen, left, welcomes Austrian Freedom Party leader Herbert Kickl, center, in his office in Vienna, Austria, Monday, Jan. 6, 2025. (AP Photo/Heinz-Peter Bader)

Austrian President Alexander Van der Bellen, left, welcomes head of the Freedom Party (FPOe) Herbert Kickl at his office, in Vienna, Austria, Monday, Jan. 6, 2025. (AP Photo/Heinz-Peter Bader)

Head of the Freedom Party (FPOe) Herbert Kickl, center, arrives at the presidential office, in Vienna, Austria, Monday, Jan. 06, 2025. (AP Photo/Heinz-Peter Bader)

Austrian President Alexander Van der Bellen, left, welcomes head of the Freedom Party (FPOe) Herbert Kickl in his office, in Vienna, Austria, Monday, Jan. 6, 2025. (AP Photo/Heinz-Peter Bader)

Austrian Freedom Party leader Herbert Kickl, center, arrives next to Austrian President Alexander Van der Bellen at the presidential office, in Vienna, Austria, Monday, Jan. 06, 2025. (AP Photo/Heinz-Peter Bader)

FILE -Leader of the Austrian freedom party, Herbert Kickl speaks during a demonstration against measures to battle the coronavirus pandemic in Vienna, Austria, Dec. 11, 2021. (AP Photo/Florian Schroetter, File)

NEW YORK (AP) — Good news on the U.S. economy is back to being bad for Wall Street, and the stock market slumped Tuesday following better-than-expected reports on the job market and business activity.

The S&P 500 fell 1.1% after giving up an early gain. The Dow Jones Industrial Average dropped 178 points, or 0.4%, while the Nasdaq composite tumbled 1.9%.

Stocks dropped under the weight of rising yields in the bond market, which jumped immediately after the release of the encouraging reports on the economy. One said U.S. employers were advertising more job openings at the end of November than economists expected. The other said activity for finance, retail and other services businesses grew much faster in December than expected.

The strong reports are of course good news for workers looking for jobs and for anyone worried about a possible recession that earlier seemed inevitable to pessimists. But such a solid economy could also keep up pressure on inflation, and it could make the Federal Reserve less likely to deliver the cuts to interest rates that Wall Street loves.

The Fed began cutting its main interest rate in September to give the economy a boost, but it’s hinted a slowdown in easing is coming. The threat of tariffs from President-elect Donald Trump has raised worries about possible upward pressure on inflation, which has stubbornly remained just above the Fed’s 2% target.

Tuesday’s report on U.S. services industries from the Institute for Supply Management also contained discouraging trends on inflation, saying price increases accelerated in December.

Expectations for fewer cuts to interest rates in 2025 had already been building for weeks, which sent longer-term Treasury yields upward. So have worries about other possible Trump policies, such as tax cuts, which could swell the U.S. government’s debt and likewise push yields higher.

Those higher yields make Treasury bonds more attractive to investors who might otherwise buy stocks, which in turn puts downward pressure on stock prices, and the super-safe bonds are paying notably more. The yield on a 10-year Treasury climbed to 4.69% from 4.63% shortly before the release of Tuesday’s reports and from just 4.15% in early December.

High yields can put heavy pressure on stocks seen as the most expensive, which pulls the lens toward Nvidia and other Big Tech stocks that have soared in the frenzy around artificial-intelligence technology.

Nvidia had been on track to set another all-time high in morning trading, after CEO Jensen Huang unveiled a suite of new products and partnerships the night before. He talked up the potential for AI technology in robotics, among other opportunities for big growth.

But after Tuesday morning's economic reports, which hit the market after its first half hour of trading, Nvidia swung to a loss of 6.2% and became the heaviest weight on the S&P 500. Losses for Amazon, Tesla, Apple and Microsoft were the next-strongest forces dragging the index lower.

Now that worries from the summer about a potentially slowing U.S. economy have abated and the 10-year Treasury yield is firmly above 4.50%, “we believe the market is shifting into a ‘good news is bad news’ environment again,” according to Bank of America strategists led by Ohsung Kwon.

That raises the stakes for Friday’s coming update on the U.S. job market, which economists expect will show a slowdown in overall hiring. They’re looking for growth of 156,500 jobs in December, according to FactSet.

A “Goldilocks” reading for the U.S. stock market that would be solid but not too strong for the Fed would likely be in the 125,000 to 175,000 range, along with an unemployment rate of 4.2%, according to Bank of America.

Helping to keep Tuesday’s losses for U.S. stock indexes in check was Cintas, which rose 2% after making public its offer to buy its smaller rival, UniFirst, for $275 per share in cash.

Cintas said it first made that offer in November but has been unable to get UniFirst’s board to meet. UniFirst had rejected an earlier offer of $255 per share, said Cintas, which provides uniforms, restroom supplies, fire extinguishers and other products to businesses.

UniFirst jumped 20.9% to $204.69, below Cintas’ offer price.

Elsewhere on Wall Street, Shutterstock and Getty climbed after they announced they were joining to become a $3.7 billion visual content company to provide customers with a broader array of still imagery, video, music, 3D and other media.

Getty Images shareholders will own a slight majority of the combined company. Getty shares jumped 24.1%, while Shutterstock climbed 14.8%.

All told, the S&P 500 fell 66.35 points to 5,909.03. The Dow Jones Industrial Average slipped 178.20 to 42,528.36, and the Nasdaq composite sank 375.30 to 19,489.68.

In stock markets abroad, some notable Chinese companies fell after the U.S. Defense Department added dozens of them to a list of companies it says have ties to China’s military. The announcement caused some of the companies to protest and say they will seek to have the decision reversed.

Added to the list were gaming and technology company Tencent, artificial intelligence firm SenseTime and the world’s biggest battery maker CATL. Tencent’s stock that trades in Hong Kong fell 7.3%.

That helped pull the Hang Seng index down 1.2%, but indexes were stronger elsewhere in China and across much of Asia and Europe.

AP Business Writers Yuri Kageyama and Matt Ott contributed.

Traders work on the floor at the New York Stock Exchange in New York's Financial District Thursday, Jan. 2, 2025. (AP Photo/Seth Wenig)

Stock price board is seen after a ceremony marking the start of this year's trading Tokyo Stock Exchange Monday, Jan. 6, 2025, in Tokyo. (AP Photo/Eugene Hoshiko)

A trader works on the floor at the New York Stock Exchange in New York's Financial District Thursday, Jan. 2, 2025. (AP Photo/Seth Wenig)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 7, 2025. (AP Photo/Ahn Young-joon)

A currency trader passes by a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 7, 2025. (AP Photo/Ahn Young-joon)

A currency trader works near a screen showing the Korea Composite Stock Price Index (KOSPI), left, and the foreign exchange rate between U.S. dollar and South Korean won at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Tuesday, Jan. 7, 2025. (AP Photo/Ahn Young-joon)