Wall Street’s main indexes fell on Monday after better-than-expected service-sector activity fueled fears that the US Federal Reserve could continue on its aggressive policy tightening path despite fears of a recession next year.
Data showed US service industry activity unexpectedly rose in November, with a jump in employment, offering more evidence of the underlying momentum in the economy.
The data comes on the heels of a survey last week that showed stronger-than-expected job and wage growth in November, challenging expectations that the Fed may slow the pace and intensity of its rate hikes amid recent signs of easing inflation. Can do.
“The labor market looks fine and so it’s almost this bizarre world where good news is bad news,” said Jonathan Waite, fund manager at Frost Investment Advisors.
“Right now it’s an issue of the Fed looking at whether they need to tighten more than they need to and last longer.”
Investors see an 89% chance that the US central bank will raise interest rates by 50 basis points next week, with rates peaking in May 2023.
The rate-setting Federal Open Market Committee meets on December 13-14, the final meeting in a volatile year in which the central bank attempted to stave off a multi-decade rise in inflation with record interest rate hikes.
The aggressive policy tightening has also raised concerns about an economic downturn, with JPMorgan, Citigroup and BlackRock all believing a recession is likely in 2023.
At 10:33 a.m., the Dow Jones Industrial Average was down 239.71 points, or 0.70%, at 34,190.17, the S&P 500 was down 39.93 points, or 0.98%, at 4,031.77 and the Nasdaq Composite was down 128.11 points, or 1.12. %, at 11,333.39.
All major Wall Street indexes posted a second straight week of gains last week, with the S&P 500 climbing 1.13%, the Dow 0.24% and the Nasdaq 2.1%.
“We’ve had a nice rally and so it’s giving investors an opportunity to take some profits and readjust their portfolios towards the end of the year,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
“I don’t think it’s the beginning of the decline, but there’s a little pause here.”
In other economic data this week, investors will also monitor weekly jobless claims, producer prices and the University of Michigan consumer sentiment survey for more clues on the health of the US economy.
Tesla Inc fell 4.7% on the electric-vehicle maker’s plans to cut December production of the Model Y at its Shanghai plant by more than 20% from last month.
Financials were among the biggest S&P sectoral losers, down 1.4%. On the other hand, energy stocks fared better, gaining 0.1%, tracking volatile crude oil prices.
Declining issues outnumbered advancers by a 3.99-to-1 ratio on the NYSE and 2.37-to-1 ratio on the Nasdaq.
The S&P Indices recorded four new 52-week highs and one new low, while the Nasdaq recorded 54 new highs and 39 new lows.
The text of this story is published from a wire agency feed without any modification.
Know your inner investor
Do you have guts of steel or are you a victim of insomnia regarding your investments? Let’s define your investment approach.
catch all business News, market news, today’s fresh news events and breaking news Update on Live Mint. download mint news app To get daily market updates.