US stock indexes closed lower on Thursday after data pointing to a tightening labor market raised renewed concerns that the Federal Reserve will continue its aggressive path of rate hikes that could tip the economy into recession.
A report from the Labor Department showed that weekly jobless claims were lower than expected, indicating that the labor market remains solid despite the Fed’s efforts to suppress labor demand.
Expectations that the central bank would reduce the size of its interest rate hike in its policy announcement next month were unchanged by the report.
Investors are looking for signs of weakness in the labor market as a key component needed for the Fed to slow down its policy tightening measures.
Other data showed manufacturing activity in the Mid-Atlantic region eased again in January, while Commerce Department data confirmed a slowdown in the housing market.
Brad McMillan, chief investment officer at Commonwealth Financial Network, said: “What we’re seeing is that the market is carving out the downside in uncertainty, so the impact of the news is waning and that’s what we’re seeing today.” He’s really just a continuation of that.” , an independent broker-dealer in Waltham, Massachusetts.
“The fact that we’re not seeing much of a response says that there’s a lot of bad news out there.”
The Dow Jones Industrial Average fell 252.4 points, or 0.76%, to 33,044.56, the S&P 500 lost 30.01 points, or 0.76%, to 3,898.85 and the Nasdaq Composite lost 104.74 points, or 0.96%, to 10,852.27.
Recent comments from Fed officials continue to highlight the gap between the central bank’s terminal rate and market expectations.
Boston Fed President Susan Collins echoed other policymakers’ comments to support the case for raising interest rates beyond 5%.
But stocks closed their session lower after Fed Vice Chairman Lael Brainard said the Fed was still “checking” for the level of interest rates that would be necessary to control inflation.
Markets, however, see the terminal rate at 4.89% until June and roughly a 25-basis point rate hike from the US central bank in February, with rate cuts expected in the back half of the year.
Both the S&P 500 and the Dow fell for the third session in a row, their longest streak of declines in over a month.
On the earnings front, Procter & Gamble Company declined 2.11% after raising its full-year sales forecast despite warning of commodity cost pressure on profits.
Analysts now expect S&P 500 companies’ year-over-year earnings to decline 2.8% in the fourth quarter, after falling 1.6% at the start of the year, according to Refinitiv data.
Netflix Inc closed 3.23% lower on Thursday ahead of its results to be released after the closing bell. But the stock gained 3.33% after posting subscriber gains for the quarter and the departure of co-founder Reed Hastings as chief executive to the role of executive chairman.
Issues declining compared to issues advancing on the NYSE at a ratio of 1.49-to-1; On the Nasdaq, a 1.70-to-1 ratio favored declines.
The S&P 500 posted 1 new 52-week high and 3 new lows; The Nasdaq Composite recorded 46 new highs and 33 new lows.
The text of this story is published from a wire agency feed without any modification.
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