Wall St logs sharp losses as labor market strength stokes rate-hike fears
Federal Reserve will be aggressive in raising U.S. interest rates. The S&P 500 posted its biggest daily percentage drop since May 23.
The Dow logged its biggest single-day fall since May 2. Private payrolls surged far more than expected in June, data showed, suggesting the labor market remained solid despite growing risks of a recession. A separate report showed U.S.
job openings dropped in May, but remained at elevated levels. A day before the monthly U.S employment report, evidence of a solid labor market spurred expectations the Fed will keep interest rates higher for longer to tame stubborn inflation. «We don't see any softening in the labor market,» said Brad McMillan, chief investment officer for Commonwealth Financial Network.
«The Fed doesn't have to worry about the jobs market. When you look at their mandate, they have no reason not to keep hiking and to keep hiking for a while.» The Dow Jones Industrial Average fell 366.38 points, or 1.07%, to 33,922.26, the S&P 500 lost 35.23 points, or 0.79%, to 4,411.59 and the Nasdaq Composite dropped 112.61 points, or 0.82%, to 13,679.04. All 11 S&P 500 sectors ended down.
Energy led declines among the sectors, dropping about 2.5%, while consumer discretionary slumped nearly 1.7%. Gains in megacap stocks mitigated declines for the major indexes, which ended above their session lows. Microsoft rose 0.9% while Apple was up 0.3%.Treasury yields jumped following the labor market data.
The benchmark 10-year yield burst above 4% while the two-year Treasury yield, which typically moves in step with interest rate expectations, hit a 16-year high. U.S. interest rate futures saw an increased probability of another rate hike by the Federal Reserve in November, according to CME's
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