Wall Street’s main indexes fell on Thursday as latest labour market data pointed to slowing economic growth due to rapid interest rate hikes, with risk-wary investors looking forward to monthly jobs data for a clearer picture of the economy.
Initial jobless claims came in ahead of expectations to a seasonally adjusted 228,000 for the week ended April 1, a Labor Department report showed, but the prior week data was revised to show 48,000 more applications were received.
Economists had expected 200,000 claims for the latest week.
Major technology and growth stocks such as Apple, Tesla and Nvidia fell between 0.9 per cent and 2.1 per cent in early trading, while bond yields inched higher.
The information technology sector was the biggest sectoral loser on the S&P 500 as investors piled into defensive stocks such as healthcare and utilities.
A string of recent reports, including weak data on private payrolls and job openings earlier this week, have suggested slowing labour demand and raised hopes of a pause in the Federal Reserve’s market-punishing rate hikes.
However, unlike in the last few months when evidence of a cooling economy was cheered by investors on hopes it would allow for a less hawkish Fed, softer data has added to fears of a recession and pressured equities in recent days.
“The last strongholds of the economy are beginning to weaken and that signals recession,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“The labour market is beginning to weaken and that’s basically playing into the hands of the Fed.”
The S&P 500 and the tech-heavy Nasdaq are headed for weekly declines for the first time in four weeks.
All eyes will now be on the more-comprehensive report on non-farm payrolls, which are expected to have increased by 239,000 in March, down from the 311,000 jobs added in the prior month.
The report is due on Friday, when the U.S. stock market will be shut for the Good Friday holiday.
Fed fund futures are indicating a 54.5% chance of the U.S. central bank pausing rate hikes in May with the remaining betting on a 25 basis point rate hike, according to CME Group’s Fedwatch tool.
A slew of major U.S. banks will kick off the first-quarter earnings season for big-ticket companies next week.
At 9:35 a.m. ET, the Dow Jones Industrial Average was down 38.64 points, or 0.12 per cent, at 33,444.08, the S&P 500 was down 14.98 points, or 0.37 per cent, at 4,075.40, and the Nasdaq Composite was down 89.02 points, or 0.74 per cent, at 11,907.84.
Among major stock moves, AMC Entertainment jumped 8.6 per cent after a U.S. court denied the theater operator’s request to lift a status quo order necessary for its stock conversion plan.
Levi Strauss fell 12.7 per cent after the apparel maker posted a fall in quarterly profit.
Declining issues outnumbered advancers for a 1.10-to-1 ratio on the NYSE and for a 1.45-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and no new lows, while the Nasdaq recorded 14 new highs and 66 new lows.
Reuters – Ankika Biswas and Amruta Khandekar