Stocks fell Thursday after jobs data showed the labor market remains to be strong amid the Federal Reserve’s rate of interest hikes to tame inflation.
The Dow Jones Industrial Average fell 212 points, or 0.64%. The S&P 500 and Nasdaq Composite slipped 0.66% and 0.80%, respectively. Bond yields ticked higher. Stocks rose from lows of the day within the afternoon when St. Louis Federal Reserve President James Bullard said that 2023 could also be a disinflationary 12 months in a speech.
Stocks opened lower after the ADP private payrolls report showed that employers added 235,000 jobs in December, well above economist estimates. Wages also increased greater than anticipated, one other sign that the labor market stays hot. Later within the morning, weekly jobless claims got here in below expectations and showed a drop in continuing claims.
“While we are going to get a greater overall picture of the roles market tomorrow, private payrolls beating expectations and jobless claims coming in below are indications that the labor market stays resilient,” said Mike Loewengart of Morgan Stanley Global Investment Office.
“These come on the heels of big-name corporations announcing sizable job cuts so there is no such thing as a doubt the market’s pressures are weighing on corporations, but it surely stays to be seen when hiring will slow demonstrably,” he added.
The moves follow a choppy trading session as traders pored over a mixed bag of economic data.
November’s Job Openings and Labor Turnover, or JOLTS, report showed the job market remained strong, bolstering concerns that the Fed could proceed raising rates of interest so long as there remained a hot marketplace for employees. However the ISM manufacturing index showed the sector was contracting.
On Friday, investors will review the December jobs report for updated data on employment and hourly wages. For the reason that report could have a big effect on the Fed’s next moves, it has the potential to affect the market. Investors don’t need to see big gains in wage growth, which could signal higher inflation.
Correction: A previous version misspelled Loewengart’s last name.
