December 2, 2022

Stocks drop as investors weigh recent interest rate swings, pending US jobs report

Stocks drop as investors weigh recent interest rate swings, pending US jobs report

US stocks fell on Thursday, as traders weighed the sharp fluctuations in stocks and rates as the month began.

The S&P 500 is down 0.45%, while the Nasdaq Composite is down 0.11%. The Dow Jones Industrial Average lost 165 points, or 0.55%. The three stock indices opened the session lower. All major averages are on track to finish the week above 4%.

The energy sector was the best performer, up 1.3%. Utilities have slowed, dropping more than 2%.

The benchmark 10-year rate rose 5 basis points to 3.809%. The two-year yield, which is most sensitive to changes in monetary policy, rose 6 basis points to 4.216%.

Investors are eagerly awaiting Friday’s jobs report, which will show how the labor market performed in September, giving central banks another clue about the rate hike campaign.

On Wednesday, data from the ADP showed that the labor market remained strong among private companies in September, when companies added 208,000 jobs, topping Wall Street estimates. But on Thursday, jobless claims were higher than expected, indicating that there may be some weakness in the labor market.

“Once again, investors are looking for bad news to be good news,” Chris Senek of Wolf Research wrote in a note Thursday, adding that even if the September report was less than expected, wage growth is likely to hold and turn into a pivotal point from the Federal Reserve. .

“While stocks are currently vulnerable to significant declines to the upside, we strongly believe that the medium-term bearish base case remains in place,” he added.

Wall Street started the week on a high, with the S&P 500 notching its biggest two-day rally since 2020. Stocks fought to keep the winning streak continuing on Wednesday but ultimately failed. The Dow closed down 42 points, or 0.14%. The S&P 500 and Nasdaq Composite were down 0.20% and 0.25%, respectively.