NEW YORK: Solid US hiring data translated into another round of interest rate angst on Thursday (Jan 5), with US stocks ending sharply lower ahead of an upcoming government jobs report.
Private employment bounced by 235,000 jobs in December, more than analysts expected, with job creation robust across small and medium establishments, according to an ADP survey.
The Dow Jones Industrial Average fell 339.69 points, or 1.02%, to 32,930.08, the S&P 500 lost 44.87 points, or 1.16%, to 3,808.1 and the Nasdaq Composite dropped 153.52 points, or 1.47%, to 10,305.24.
“It’s very clear that good news on the labour market means bad news for the stock market. Data is showing that the labour market is very resilient,” said Anthony Saglimbene, chief market strategist at Ameriprise in Tory Michigan.
“As long as the labour market is resilient, the Federal Reserve has to continue to tighten financial conditions to bring inflation down,” said the strategist who expects investors to be keenly focused on wage inflation in Friday’s jobs report.
The data follows Federal Reserve (Fed) meeting minutes released on Wednesday that continued to suggest a hard line on inflation after multiple interest rate increases in 2022.
“It’s back to ‘good news is bad news’,” said Cresset Capital’s Jack Ablin, referring to the labour market resilience that has fuelled worries of more Fed interest rate increases.
Thursday’s drop comes ahead of Friday's government jobs report for December. Analysts expect the US economy added 210,000 jobs in December and that the unemployment rate stayed at 3.7%.
Among individual companies, Amazon shed 2.4% as it announced it was cutting 18,000 jobs in the largest downsizing of the online giant's history.
Other large tech names also had a rough session, with Microsoft losing 3% and Google parent Alphabet 2.2%.
Bed Bath & Beyond sank around 30% as it warned that there is “substantial doubt about the company’s ability to continue as a going concern”, a sign it could file for bankruptcy.
The retailer said it expected a loss of US$386 million in the just-finished quarter.
Tesla Inc ended down 2.9% after December sales of its China-made electric vehicles fell to a five-month low. – AFP, Reuters