- Procter & Gamble falls after warning of commodity cost pressures
- Netflix down ahead of quarterly results
- Dow down 0.36%, S&P 500 down 0.35%, Nasdaq down 0.55%
NEW YORK, Jan 19 (Portal) – US stock indexes fell on Thursday after data pointing to a tight labor market fueled concerns that the Federal Reserve will maintain its aggressive trajectory of rate hikes and lead to a policy mistake which could plunge the economy into recession.
A Labor Department report showed that weekly jobless claims were lower than expected, suggesting the job market remains solid despite the Fed’s efforts to dampen labor demand.
Expectations that the central bank would further taper the scope of its interest rate hikes in its monetary policy announcement next month remained unchanged by the report. Investors have been waiting for signs of weakness in the labor market as a key element for the Fed to slow tightening.
unemployment claims
Other data showed that manufacturing activity in the Mid-Atlantic region was again subdued in January, while Commerce Department data confirmed that the recession in the housing market was ongoing.
“You have two diametrically opposite pieces of data — one is weakening spending data and things like that, and the other is jobs data that’s still pretty resilient,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.
“It’s like a swing, you don’t know what the Fed is going to do to raise rates again, by how much, keep them steady, so they’re going to overdo it?”
The Dow Jones Industrial Average (.DJI) fell 119.6 points, or 0.36%, to 33,177.36, the S&P 500 (.SPX) lost 13.93 points, or 0.35%, to 3,914.93 and the Nasdaq Composite (.IXIC) fell 60.48 points 0.55% to 10,896.53.
Recent comments from Fed officials continue to underscore the disconnect between the central bank’s view of its final rate and market expectations.
Boston Fed President Susan Collins echoed comments from other policymakers in arguing for a rate hike above 5%. Fed Deputy Chairman Lael Brainard said the Fed is still “assessing” the level of interest rates it will take to control inflation.
However, markets see the final rate at 4.89% through June and have largely priced in a 25 basis point rate hike by the US Federal Reserve in February, with rate cuts in the second half of the year. .
Both the S&P 500 and the Dow were poised to fall for a third straight month, their longest streak of declines in a month.
On the earnings side, Procter & Gamble Co (PG.N) fell 1.04% after warnings about raw material costs weighed on earnings despite raising full-year sales guidance.
Analysts now expect annual earnings for S&P 500 companies to fall 2.8% year over year in the fourth quarter, according to Refinitiv data, compared to a 1.6% decline earlier in the year.
Netflix Inc (NFLX.O) fell 0.94% from its scheduled results after Thursday’s closing bell, in which it is expected to report the slowest quarterly revenue growth.
Declining issuance outweighed the NYSE 1.50 to 1; on the Nasdaq, a 1.63 to 1 ratio favored decliners.
The S&P 500 posted a new 52-week high and two new lows; the Nasdaq Composite posted 37 new highs and 31 new lows.
Reporting by Chuck Mikolajczak, editing by Deepa Babington
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