NEW YORK: Wall Street stocks retreated on Thursday (Oct 5) ahead of keenly anticipated employment data that will be scrutinised for its implications on US monetary policy.
Investors are looking ahead to today's (Oct 7) US jobs report, expected to show the world's biggest economy added 250,000 positions in September and that unemployment held steady at 3.7%.
Stocks rallied the first two days of this week due to rising hopes the Federal Reserve (Fed) might moderate its inflation-fighting stance in light of weakening economic data.
But equity market drops the last two days have suggested investors are rethinking, as Fed officials continue to stress the need for more action. A better-than-expected jobs report could send stocks lower due to expectations for more aggressive interest rate increases.
“You’d have to be very courageous to make a big bet today before the jobs data,” said Gregori Volokhine of Meeschaert Financial Services. “Today people are playing the waiting game.”
The Dow Jones Industrial Average fell 346.93 points, or 1.15%, to 29,926.94, the S&P 500 lost 38.76 points, or 1.02%, to 3,744.52 and the Nasdaq Composite dropped 75.33 points, or 0.68%, to 11,073.31.
“The market has been slowly getting the Fed’s message,” said Jason Pride, chief investment officer for private wealth at Glenmede in Philadelphia.
“There’s a likelihood that the Fed with further rate hikes pushes the economy into a recession in order to bring inflation down,“ Pride said. “We don’t think the markets have fully picked up on this.”
Pride sees a mild recession, but in the average recession there has been a 15% decline in earnings, suggesting the market could fall further. The S&P 500 has declined 22% from its peak on Jan. 3.
Despite the day's decline, the three major indicees were poised to post a weekly gain after the sharp rally on Monday and Tuesday.
Among individual companies, Twitter fell 3.4% after a legal filing from Elon Musk asking a US judge to suspend Twitter's lawsuit over their troubled takeover negotiations after the embattled social media company balked at the Tesla chief's demand to freeze the litigation. – AFP, Reuters
