Wall St ends with strong jobs data, keeping pressure on for rate hikes

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June 3 (Reuters) – U.S. stock indexes ended lower on Friday after a strong jobs report undermined hopes of a pause in the aggressive Federal Reserve policy tightening needed to calm the economy. inflation, which has been high for decades.

Shares of market heavyweights Apple Inc (AAPL.O) and Tesla Inc (TSLA.O) were also major market drags, dragging down the consumer discretionary (.SPLRCD) and technology (.SPLRCD) sectors. SPLRCT) while energy (.SPNY) outperformed. as oil prices rose.

Earlier, the Labor Department’s closely watched report showed nonfarm payrolls rose by 390,000 jobs last month and wages rose, while the unemployment rate held steady at 3.6% – all signs of a tight labor market. Read more

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Economists polled by Reuters had forecast nonfarm payrolls to rise by 325,000 jobs. Read more

While the jobs report was reassuring for the current state of the economy, investors focused primarily on its potential influence on central bank policy.

“The market is trying to channel its response through what the Fed can or cannot do,” said Nela Richardson, chief economist at ADP, who expects the market to continue to swing due to the uncertainty surrounding interest rates and inflation.

Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, saw the strong report as a double-edged sword.

“That tells us the economy is in pretty good shape, which is good news, but seen in the context of what that means for the Federal Reserve and monetary policy tightening, it probably makes them more confident than ‘they can continue to tighten,’ he said. “That seems a bit negative for investors as they hope the Fed will take a break later this year.”

Money markets are fully pricing in the Fed’s 50 basis point rate hikes in June and July.

While the slower-than-expected rise in hourly earnings from the May report seemed like good news for inflation, Snyder cited rising oil prices as an offsetting factor.

According to preliminary data, the S&P 500 (.SPX) lost 68.42 points, or 1.64%, to end at 4,108.40 points, while the Nasdaq Composite (.IXIC) lost 305.50 points, or 2.48%, to 12,011.40. The Dow Jones Industrial Average (.DJI) fell 351.39 points, or 1.06%, to 32,896.89.

Volatility has gripped Wall Street in recent weeks as investors wonder if markets have bottomed amid hawkish comments from Fed officials and data suggesting inflation may have peaked. Read more

“At the moment, the economy looks okay. And the labor market, as a signal of the real economy on Main Street, looks incredibly strong,” said ADP’s Richardson, adding that she views inflation as “a threat to these prospects” although it may have pointed.

“The spike is less relevant than the lingering power of inflation and high rates,” she said. “That’s why wages in this report were so important. Although wage growth won’t drive inflation past the peak, it could play an important role in keeping inflation around those higher levels. much longer than anyone would like or anticipate.”

iPhone maker Apple fell after a bearish brokerage outlook and a report that EU countries and lawmakers would agree next week on a common charging port for mobile devices and headphones – a proposal criticized by Apple.

Tesla shares sank after CEO Elon Musk, in an email to executives seen by Reuters, said he had a “super bad feeling” about the economy and needed to cut about 10 % of jobs at the electric car manufacturer. Read more

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Reporting by Sinead Carew in New York Additional reporting by Sruthi Shankar, Medha Singh, Devik Jain and Anisha Sircar in Bengaluru Editing by Maju Samuel and Matthew Lewis

Our standards: The Thomson Reuters Trust Principles.

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