Wall Street’s main indexes fell sharply on Thursday as fresh evidence of a tight labor market and hawkish comments from policy makers deepened fears of higher interest rates for longer than expected.
Most large technology and other growth stocks such as Alphabet Inc and Microsoft Corp fell more than 1% as US Treasury yields rose on longer-term rate-hike expectations.
Tesla Inc fell more than 5% after December sales of China-made electric vehicles fell to a five-month low, while Amazon.com Inc, which announced increased layoff plans, reversed premarket gains.
On the benchmark S&P 500 index, rate-sensitive real estate stocks led the losses, falling 2.2%, while financials slipped 1%.
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The ADP National Employment Report showed a larger-than-expected increase in private employment in December, while another report showed a decline in weekly jobless claims last week.
The report came a day after data showed a slight decline in US job openings, in mounting evidence that the labor market remains tight.
“The market wants to see more unemployment for the Fed to stop hiking and today’s report was actually good from an economic perspective, but worse than the Fed stopping,” said Thomas Hayes, president of Great Hill Capital LLC in New York. ,
“It’s going to be a knee-jerk reaction to stronger-than-expected economic data. But as the week progresses, reality will set in and more of these layoff announcements will be forthcoming.”
A tightening labor market has been a concern for markets hit by rising borrowing costs as it gives the Federal Reserve reason to raise rates longer than expected this year.
In the previous session, Wall Street’s main indexes erased some of their gains after minutes of the Fed’s December meeting showed the central bank was laser-focused on fighting inflation, even as officials tried to limit risks to economic growth. agreed to slow down the pace of rate hikes for
Kansas City Fed leader Esther George and Atlanta President Rafael Biostic both stressed on Thursday the priority of curbing stubborn price pressures through a tightening of the central bank’s policy.
Traders were almost evenly split on the likelihood of 25-basis point and 50-bps rate hikes in February, but still see a rate hike of slightly more than 5% in June.
A more comprehensive non-farm payrolls report is due on Friday, which will provide further clues on the labor demand and rate hike trajectory.
At 9:49 a.m., the Dow Jones Industrial Average was down 409.07 points, or 1.23%, at 32,860.70, the S&P 500 was down 46.53 points, or 1.21%, at 3,806.44 and the Nasdaq Composite was down 148.62 points, or 1.42. %, at 10,310.14.
In individual stocks, Walgreens Boots Alliance Inc dropped 6.7% after the drugstore chain reported a quarterly loss charged with an opioid litigation.
Bed Bath & Beyond Inc lost 21.8% after the company said it was exploring options, including a bankruptcy filing.
Declining issues outnumbered advancers by a 5.18-to-1 ratio on the NYSE and 3.46-to-1 ratio on the Nasdaq.
The S&P Index recorded five new 52-week highs and three new lows, while the Nasdaq recorded 17 new highs and 33 new lows.
The text of this story is published from a wire agency feed without any modification. Only the headline has been changed.
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