NEW YORK: Wall Street’s main indexes fell on Thursday on worries about persistent inflation and the Federal Reserve’s aggressive rate-hike cycle, while shares of Tesla fell on worries over funding for Elon Musk’s proposed buyout of Twitter.
Before dropping, markets briefly took comfort from data which showed an increase in weekly jobless claims as it raised hopes of the Fed likely to go easy with its rapid rate hikes.
However, Minneapolis Fed President Neel Kashkari said the US central bank is “quite a ways away” from being able to pause its aggressive interest-rate hikes.
Data showed the number of Americans filing new claims for unemployment benefits rose more than expected last week, but the labor market remains tight even as demand for labor is cooling amid higher interest rates.
Following the report, the benchmark 10-year Treasury yield initially moved lower before gaining, weighing on rate-sensitive growth stocks including Apple Inc, Meta Platforms Inc, Amazon.com Inc, and Nvidia Corp .
Tesla Inc fell 1.9% as Apollo Global Management Inc and Sixth Street Partners, which had been looking to provide financing for Musk’s $44-billion Twitter deal, are no longer in talks with the billionaire.Meanwhile, oil prices held near three-week highs after the OPEC+ group of nations’ largest supply cut since 2020 ahead of European Union embargoes on Russian energy is set to tighten global oil supply.
“There’s no question that the reduction in output from OPEC+ is putting some upward pressure on oil prices and on prices at the pump, and that’s very troubling,” said Hugh Johnson, chief economist at Hugh Johnson Economics in Albany, New York. All but the energy sector index fell among the 11 major S&P 500 sector indexes.At 10:24 a.m. ET, the Dow Jones Industrial Average was down 210.92 points, or 0.70%, at 30,062.95, the S&P 500 was down 27.30 points, or 0.72%, at 3,755.98, and the Nasdaq Composite was down 74.81 points, or 0.67%, at 11,073.83.
Data on Wednesday showed increased monthly hiring by private employers in America and a rise in ISM’s services industry employment gauge, suggesting the Fed will keep interest rates higher for longer.Monthly non-farm payrolls and unemployment rate data, due on Friday, will be at the top of investors’ radar to assess the quantum of the Fed’s future rate hikes.
Money markets are pricing in a nearly 80% chance of a fourth straight 75-basis-point rate hike at the Fed meet on November 1-2.
Investors will also closely listen to comments on inflation and rate hikes from Fed officials including Cleveland President Loretta Mester, Fed Board Governor Lisa Cook, Board Governor Christopher Waller and Chicago President Charles Evans. Growing fears of a looming recession in corporate leadership is expected to weigh on capital spending and job openings, Goldman Sachs said in a note.
Declining issues outnumbered advancers for a 2.68-to-1 ratio on the NYSE and for a 1.66-to-1 ratio on the Nasdaq. The S&P index recorded two new 52-week highs and 21 new lows, while the Nasdaq recorded 20 new highs and 50 new lows.
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