US stocks sank on Thursday after a dramatic two-day rally to start the quarter.
The S&P 500 and Dow Jones Industrial Average each fell 0.8%, while the tech-heavy Nasdaq Composite fell 0.7%. Meanwhile, in the bond market, Treasury yields rose, with the benchmark 10-year note above 3.77% and the rate-sensitive 2-year yield at 4.17%.
Investors weighed in on a batch of bogus comments from Federal Reserve officials Thursday morning. Minneapolis Fed President Neel Kashkari acknowledged that there was a risk of overshooting, as much policy tightening has yet to work its way through the economy. Still, he claimed, he and his colleagues were “a long way off” from reducing inflation.
Echoing that sentiment, Cleveland Fed President Loretta Mester said the US is in an “unacceptably high” inflation environment.
On the commodities front, US crude futures held on to a more than 10% gain this week after OPEC+ approved its steepest production cut since 2020 on Wednesday, by 2 million bpd barrels a day, after US officials tried to lobby against the move.
“These higher oil prices certainly prevent gasoline prices from continuing their seasonal decline over the winter,” Lipow Oil Associates President Andrew Lipow told Yahoo Finance Live on Wednesday. “The consumer at the gas pump will already see the impact in the coming weeks.”
Current Labor Department data showed a jump in the number of Americans filing for unemployment insurance for the first time last week. Initial jobless claims rose sharply to 219,000 in the week ended Oct. 1 after falling to 193,000, the lowest since April the previous week. Economists called for 203,000 claims, according to consensus estimates compiled by Bloomberg.
Other recent economic data reflecting a larger-than-expected drop in job offers and a sharp cooling in manufacturing activity have fueled optimism that the Federal Reserve could target its policy-tightening plans before the expected, but many on Wall Street remain skeptical that the data has moderated enough. to convince officials to reduce rate increases.
On Tuesday, investors cheered the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS), which showed vacancies fell 1.1 million to 10.1 million on the last business day of august However, the ADP’s private employment report showed that the US economy added 208,000 jobs in September, more than expected, continuing a trend of surprises in the ‘rise to labor market data.
“Ahead of this Friday’s Non-Farm Payrolls (NFP) and next Wednesday’s CPI, the market has been oscillating between the ‘hawkish Fed’ and the ‘pivot Fed’ narrative,” they JPMorgan analysts said in a note Thursday, adding that other data points. , including the ADP jobs reading, “shows that the economy remains strong and thus weakens hope for a near-term Fed pivot.”
The Labor Department’s September jobs report due out Friday morning at 8:30 am ET will be the most important release for investors. Economists expect nonfarm payrolls rose by 260,000 last month, according to the latest Bloomberg estimates.
“Equity touches would need a print around 100,000 to see the market alter its Fed expectations,” JPMorgan noted.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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