Written by Stephen Kolb
NEW YORK (Reuters) – Wall Street fell on Thursday after a slew of economic data failed to alter the expected course of aggressive moves by the Federal Reserve to contain inflation.
The index reversed earlier gains, testing a closely watched support level, while market leaders’ shares declined Microsoft Corporation (NASDAQ:) and Apple Inc (NASDAQ) hit the tech-loaded Nasdaq even harder.
The interest rate sensitive banks helped reduce the decline of the Dow Jones Index.
“It’s been a tough year and investors are concerned,” said Matthew Keator, managing partner at Keetor Group, a wealth management firm in Lenox, Massachusetts. “Until something changes, the tie will go to the runner and that’s the bear.”
A mixed batch of economic data, led by better-than-expected retail sales, boosted the prospect of another 75 basis point interest rate hike from the Federal Reserve at the conclusion of next week’s monetary policy meeting, as doubts mount over the whereabouts of the central bank. It will go from there.
“The Fed has pretty well informed that they will carry their increases up front,” Kittor added. “(But) after three hikes of 75 basis points, how much forward loading can we expect?”
While the retail sales report surprised the upside, lower jobless claims reaffirmed the strength of the labor market, and lower import prices supported the inflation narrative at its last peak.
But the sudden drop in industrial production and shrinking manufacturing in the Atlantic region provided fodder for economic pessimists.
None of the data appears to change the calculus regarding the Fed’s outlook. Financial markets have now priced the entire rate hike at at least 75 basis points next Wednesday, with a one in five chance of a significant 100 basis point hike, according to CME’s FedWatch Tool.
US railroads remained open after the Biden administration helped broker an initial deal with unions to avert a strike, and thus avoid a rail shutdown that would add to supply chain stresses at the heart of hot inflation.
At 2:17 p.m. EDT, the index was down 21.01 points, or 0.07%, to 31,114.08, and the S&P 500 lost 26.82 points, or 0.68%, to 3,919.19, and dropped 122.80 points, or 1.05%, to 11.596.88.
Of the 11 major S&P 500 sectors, utilities suffered the largest decline, while health care led the gainers, buoyed by the health insurance company. Humana you (NYSE:) Strong earnings outlook.
Banks, which tend to benefit from a higher price environment, advanced 2.3%.
railway operators Union Pacific (NYSE 🙂 and Southern Norfolk (NYSE:) gained 1.9% and 1.1%, respectively, but CSX Corp (NASDAQ 🙂 slid 2.4% after announcing the imminent retirement of CEO James Foot.
Adobe (NASDAQ:) Inc fell 17.0% after the company said it would buy Figma in a cash-and-stock deal that valued the online design startup at about $20 billion.
Low issues outnumbered advanced issues on the New York Stock Exchange by 1.93 to 1; On the Nasdaq, the ratio was 1.09 to 1 in favor of declining stocks.
S&P 500 not hit 52-week highs and 12 new lows; The Nasdaq recorded 10 new highs and 148 new lows.