NEW YORK: Wall Street stocks finished lower on Monday (Feb 6) following a downcast session marred by worries over Federal Reserve (Fed) policy and the state of US-China relations.
The yield on the 10-year US Treasury note, a proxy for Fed interest rate policy, climbed higher after strong employment and services sector data released on Friday.
The figures raised worries that the US central bank may extend its run of aggressive measures to counter inflation.
Adding to the unease was harsh banter between Washington and Beijing after the Pentagon shot down an alleged Chinese spy balloon that had been flying over North America.
The Dow Jones Industrial Average ended down 35.85 points, or 0.11%, at 33,890.16, the S&P 500 lost 25.44 points, or 0.62%, to 4,111.04 and the Nasdaq Composite dropped 119.51 points, or 1%, to 11,887.45.
Traders are keeping a close eye on speeches by Fed officials this week, including chair Jerome Powell on Tuesday, for any change in the central bank's rhetoric after data last week showed services activity was strong in January as well as strong job growth.
“We got that blowout jobs report, and people have had to reassess what the outlook for the Fed and the economy is. Tomorrow it will be interesting to see if Powell continues his transformation from hawk to dove,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.
US Treasury Secretary Janet Yellen said on Monday the United States may avoid a recession as inflation is coming down while the labor market remains strong.
The latest economic numbers were strong and raised the question of what the Fed is going to do next, said Hugh Johnson of Hugh Johnson Economics.
The worry is that “the Federal Reserve policy is not going to change into anything like a pause or a reduction anytime soon”, he said.
Analysts added that the market was also primed for profit-taking after a buoyant January that saw equities rise in spite of a worsening outlook for corporate profits.
Among individual companies, Tyson Foods slid 4.6% as the food giant reported lower quarterly profit that missed analyst expectations, saying that “operational inefficiencies” impacted profitability.
Dell Technologies fell 3% after announcing that it will lay off some 5% of its global workforce, or around 6,650 employees, marking the latest casualties of a job-slashing wave hitting the US tech sector. – AFP, Reuters
