The S&P 500 and Nasdaq Composite fell Thursday as renewed concern swirled on Wall Street over the Federal Reserve’s interest rate policy path, and whether policymakers will enact another hike this year.
The tech-heavy Nasdaq fell for a fourth day, losing more than 1.2%, while the broad-based S&P slid 0.5%. The Dow Jones Industrial Average traded near the flatline.
Apple shares dropped 3.6% on a Bloomberg News report that China’s looking to broaden a ban on the use of iPhones in state-owned companies and agencies.
A series of economic data points Thursday — including fewer-than-expected jobless claims — contributed to fears that the still strong labor market may make the Federal Reserve think twice about relaxing its tight monetary policy stance. Weekly jobless claims came in at 216,000, versus the 230,000 expected by Dow Jones, while second-quarter labor costs rose more than anticipated.
Combined with the recent uptick in energy prices, a stronger jobs market will boost the need for the Fed to act, said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“People were hoping the Fed would be on hold for the rest of the year, but it’s possible that we got one or two more rate hikes to come,” he said. “All things being equal, that’s a little bit of a negative for the stock market, which was expecting the Fed to potentially be done for the year.”
Traders also combed through the latest corporate earnings reports. C3.ai slid 16% after reporting lower-than-expected gross margin in the recent quarter, while ChargePoint Holdings more than 24% after missing revenue estimates.
The major U.S. stock benchmarks are coming off a losing session Wednesday as higher Treasury yields pressured tech stocks and heightened investor worries that the Federal Reserve will use recent stronger-than-expected economic data to justify additional hikes.
While 93% of interest rate traders foresee no change at September’s Federal Open Market Committee meeting, expectations of an additional interest rate hike at the November meeting rose to 45%, according to the CME FedWatch tool.