December 4, 2022

US stock indexes were lower in Wednesday afternoon trading, after paring losses in the morning, while data showed steady growth in private sector jobs and the services sector, with more room for the Federal Reserve to continue raising interest rates. indicated.

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The Dow jumped 825 points, or 2.8%, on Tuesday, while the S&P 500 gained 3.1% and the Nasdaq Composite 3.3%.

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Wall Street shares are coming off their best two-day stretch in two years on Wednesday, with stock indexes selling some selloff following a strong September private employment report.

Data released Wednesday showed private sector payrolls rose 208,000 in September, indicating steady growth and supporting the view that the Fed has enough room to raise interest rates. Economists polled by the Wall Street Journal had expected an increase of 200,000.

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The report came two days after a closer look at non-farm payroll data released by the Bureau of Labor Statistics. Investors are eyeing it for important guidance on the Fed’s policy stance at its November meeting.

Friday’s employment report is expected to show that the economy added 275,000 jobs in September, compared to 315,000 new positions in August, according to a survey conducted by Dow Jones.

“It can certainly move the needle,” said Christina Hooper, chief global market strategist at Invesco. “Again, that doesn’t mean it’s really going to change the market, but if we get a disappointing jobs report it could be a catalyst for a short-term rally.”

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“But keep in mind, this is an anticipation of a Fed pivot based on data. But it does not ensure Fed pivots. And so it could be one of those short-term rallies like we saw earlier this week,” Hooper said. Told.

In other data Wednesday, an ISM barometer of US trade conditions in the services sector fell to 56.7% in September, but still steady growth and rising employment indicated the economy was still expanding.

The US trade deficit fell to $67.4 billion in August, the lowest level since mid-2021, paving the way for a resumption of GDP growth in the third quarter.

Why investors shouldn’t expect a break from stock-market whiplash, says this strategist

According to Dow Jones Markets data, the S&P 500 has enjoyed its biggest two-day percentage gain since April 2020, and the best start since 1938.

The surge followed the decline in three quarters, the worst such run since 2008, during which time the S&P 500 fell 24.8% to a nearly two-year trough as investors worried that the Federal Reserve would try to crush inflation. An increase in the reserve interest rate will hurt the economy.

The stock market is rallying on the back of the US dollar. It’s all about the bonds.

A key reason behind the increase earlier this week was the idea that the Fed would do away with its aggressive monetary tightening.

Citi’s chief Asia economist Johanna Chua said that although US economic growth remained in a better position than other countries and Fed officials continued to raise voices, the market risked going the wrong way with any indication that interest rates could soon rise. It can only reach its peak.

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“Even though the overall fundamental setup hasn’t changed… bearish risk/bearish rates/cutting bullish USD positions has created a sharp reversal,” Chua said.

Federal Reserve Bank of San Francisco President Mary Daly said on Wednesday that the Federal Reserve needs to raise its benchmark interest rate to quell inflation, which hit a 40-year high earlier this year. There has been little sign of cooling. Atlanta Fed President Rafael Bostic will speak at 4 p.m. Eastern.

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—Jamie Chisholm contributed reporting