Wall Street’s main indexes fell on Thursday after the latest data suggested labor market conditions remained tight, while investors assessed the minutes of the Federal Reserve’s July meeting that signaled a less aggressive monetary policy tightening. .
Eight of the 11 key S&P 500 sectors fell in early trade, with consumer discretionary and communications services stocks falling.
Labor Department data showed the number of Americans filing new claims for unemployment benefits fell last week and sharply revised prior period figures.
“There has been a decline in jobless claims again this week, reflecting the strength of the labor market,” said Chris Zacarelli, chief investment officer at the Independent Advisor Alliance.
“Unfortunately, what is good for the American worker is bad for the Fed’s effort to reduce inflation to 2%.”
Traders still see a slightly higher chance of the Fed raising rates by 50 basis points in September, not a third 75 basis-point hike.
“I will feature tomorrow’s release of the minutes of the last meeting,” said Art Hogan, chief market strategist at B Riley Wealth.
Data showing relatively soft inflation in July has fueled a risk-on rally in Wall Street over the past few weeks, with the focus now on the Fed’s annual Jackson Hole symposium next week.
Either a rate hike of 50 bps or 75 bps in September would be a “reasonable” way to get short-term borrowing costs down to a little over 3% by the end of the year and slightly higher than in 2023, said the president of the San Francisco Federal Reserve Bank. Mary Daly said on Thursday.
The Fed has raised its benchmark interest rate by 225 bps so far this year to control inflation for four decades.
At 10:05 am, the Dow Jones Industrial Average was down 97.62 points, or 0.29%, at 33,882.70, the S&P 500 was down 8.11 points, or 0.19%, at 4,265.93 and the Nasdaq Composite was down 46.37 points, or 0.36. %, at 12,891.75.
The tech-heavy Nasdaq has jumped nearly 22% from its mid-June lows, while the benchmark S&P 500 is up 17%, supported by upbeat results from Corporate America.
However, retail earnings have been mixed so far, with encouraging reports from Walmart and Home Depot earlier this week, while a drop in Target’s profit pulled the retail sector down 1.2% on Wednesday.
Kohl’s Corp fell 4% after the retailer cut its full-year sales and profit forecast.
Verizon Communications Inc fell 2.5% after MoffettNathanson downgraded shares of the telecom operator.
The decline issues outweighed the advances for a 1.13-to-1 ratio on the NYSE and a 1.45-to-1 ratio on the Nasdaq.
The S&P index recorded three new 52-week highs and 29 new lows, while the Nasdaq recorded 26 new highs and 31 new lows.
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