On Thursday, Wall Street fell as statistics indicating a strong labor market and hawkish minutes from the Federal Reserve’s June meeting fueled fears that the central bank would hold interest rates higher for longer.
The ADP National Employment report revealed that private payrolls expanded more than predicted in June, showing that the job market remained solid despite rising chances of a recession from higher interest rates.
According to another survey, the number of Americans filing new applications for unemployment benefits increased slightly last week.
“The Fed has been hopeful of seeing a modest deterioration in the labor market,” said Randy Frederick, managing director of trading and derivatives at Charles Schwab.
“But since the ADP number was almost twice of what was expected, it generally implies there’s potential for more rate hikes going forward.”
According to CME’s Fedwatch tool, money market traders now expect a near 95% chance of a quarter-point raise at the bank’s next meeting on July 26, up from 90.5% earlier in the day.
Dallas Fed President Lorie Logan, a voting member of the Fed’s rate-setting committee, said on Thursday that raising rates during the June policy meeting would have been “entirely appropriate.”
In early trading, all 11 major S&P 500 sectors were in the red, with technology stocks (.SPLRCT) leading falls, down 0.9%.
Meta Platforms (META.O) gained 0.6% as it took aim at Twitter with its Threads app, which drew millions of users within hours of its Wednesday launch.
The previous session saw a drop in US market indices as the Fed minutes revealed that the clear majority of policymakers expected future policy tightening even though they agreed to maintain rates stable in June.
Investors are looking forward to the Institute for Supply Management’s non-manufacturing purchasing managers’ index reading and the job vacancies and labor turnover survey, which are both coming later in the day.
Among other movers, chipmakers Qualcomm (QCOM.O) and Intel (INTC.O) extended losses, falling more than 1.8% each, as the trade battle between Beijing and Washington heated up after China limited metals used in semiconductors exports on Monday.
