Wall St slips as labor market data fuels Fed worries

  • Procter & Gamble falls after warning of pressure on commodity prices
  • Netflix falls ahead of quarterly results
  • Dow down 0.76%, S&P 500 down 0.76%, Nasdaq down 0.96%

NEW YORK, Jan 19 (Reuters) – U.S. stock indexes closed lower on Thursday after data pointing to a tight labor market renewed concerns that the Federal Reserve will continue its aggressive rate hike path that could push the economy into recession. .

A report from the Department of Labor shows every week unemployment claims were lower than expected, indicating that the labor market remains stable despite the Fed’s efforts to stifle demand for workers.

Expectations that the central bank will further reduce the size of interest rate hikes at its policy announcement next month were unchanged by the report.

Investors are looking for signs of weakness in the labor market as a key ingredient needed for the Fed to start slowing its policy tightening measures.

Unemployment claims

Other data showed that manufacturing activity in the Mid-Atlantic region eased again in January, while data from the Commerce Department confirmed that the recession in the housing market is continuing.

“What we’re seeing is that the market is digging through the bottom of the uncertainty, so the news is having less of an effect, and what we’re seeing today is really just a continuation of that,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. independent broker-dealer in Waltham, Massachusetts.

“The fact that we’re not seeing more of a reaction shows that a lot of the bad news is out there.”

The Dow Jones Industrial Average (.DJI) fell 252.4 points, or 0.76%, to 33,044.56, the S&P 500 (.SPX) lost 30.01 points, or 0.76%, to 3,898.85 and the Nasdaq Composite (.IXIC) fell 104.74 points, or 0.96%, to 10,852.27.

Traders work at the post where Carvana Co. is traded. on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 7, 2022. REUTERS/Brendan McDermid

Recent comments from Fed officials continue to highlight the disconnect between the central bank’s view of its terminal rate and market expectations.

Boston Federal Reserve President Susan Collins echoed comments from other politicians in support of raising interest rates above 5%.

But stocks moved off their session lows after the Fed vice chairman Lael Brainard said The Fed is still “probing” the level of interest rates that will be needed to control inflation.

However, markets see the final rate at 4.89% by June and have largely priced in a 25 basis point rate hike by the US central bank in February, with rate cuts in the latter half of the year. .

Both the S&P 500 and Dow fell for a third straight session, their longest losing streak in a month.

As for earnings, Procter & Gamble Co (PG.N) down 2.11% after a warning of raw material costs putting pressure on profits despite raising the full-year sales forecast.

Analysts now expect annual earnings at S&P 500 companies to fall 2.8 percent in the fourth quarter, according to data from Refinitiv, compared with a 1.6 percent decline at the start of the year.

Netflix Inc (NFLX.O) closed 3.23% lower ahead of results scheduled for release after the closing bell on Thursday. But the stock recovered to gain 3.33% after that posting earnings from subscribers for the quarter and the departure of co-founder Reid Hastings as CEO to the role of executive chairman.

Declining issues outnumber rising ones on the NYSE by a ratio of 1.49 to 1; on the Nasdaq, a ratio of 1.70 to 1 favored the decliners.

S&P 500 posts 1 new 52-week high and 3 new lows; The Nasdaq Composite posted 46 new highs and 33 new lows.

Reporting by Chuck Mikolajczak Editing by Deepa Babington

Our standards: Thomson Reuters Trust Principles.

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