NEW YORK: The benchmark S&P 500 and the tech-heavy Nasdaq fell on Thursday as the 10-year Treasury yield held above 4% following hotter-than-expected labor market data, while strong results from software company Salesforce boosted the blue-chip Dow.
The yield on 10-year Treasury notes touched a fresh four-month high of 4.07% after data showed the number of Americans filing new unemployment claims fell again last week, pointing to sustained strength in the labor market.
Another report showed US labor costs grew faster than initially thought in the fourth quarter.
The two-year yield, which best reflects short-term rate expectations, hit a fresh 15-year high at 4.91%.
“It doesn’t look like the jobs market is responding to higher rates. The unit labor cost is double the expectations because wages are up and productivity is down, so nothing is really working in favor of markets,” said Jack Ablin, chief investment officer at Cresset Capital.
After a lackluster February, Wall Street indexes kicked off March on a volatile note as fresh evidence of persistent price pressures and comments from Federal Reserve policymakers fueled worries about the US central bank staying hawkish for longer.
The S&P 500 and Nasdaq fell on Wednesday after data showed US manufacturing contracted for a fourth straight month in February, although raw material prices increased last month.
Traders of futures tied to the Fed’s policy rate see about an even chance that the rate will get to a range of 5.5%-5.75% by September, from the current range of 4.5%-4.75%.
Monthly payrolls and consumer prices data in the coming days will offer investors more clues on the path of rates heading into the Fed’s March 21-22 meeting, where it is currently expected to raise rates by 25 basis points.
At 11:41 a.m. ET, the Dow Jones Industrial Average was up 96.67 points, or 0.30%, at 32,758.51, the S&P 500 was down 9.32 points, or 0.24%, at 3,942.07, and the Nasdaq Composite was down 66.20 points, or 0.58%, at 11,313.29.
The S&P 500 was trading just above its 200-day moving average, seen as a key support level by traders.
“This is a level where people would traditionally be looking to buy. And we have a vacuum of any further negative catalyst until later in March, so this is an area of no downside in the near term,” said David Russell, vice president of market intelligence at TradeStation.
Salesforce Inc soared 11.6%, set for its best day since August 2020, after the cloud-based software firm forecast first-quarter revenue above analysts’ estimates and doubled its share buyback to $20 billion.
Tesla Inc fell 6.4% after Chief Executive Elon Musk and team’s four-hour presentation failed to impress investors with few details on its plan to unveil an affordable electric vehicle.
Macy’s Inc jumped 8.7% after the department store operator forecast full-year profit above Wall Street estimates, Silvergate Capital plunged 44.3% after the crypto-focused lender delayed its annual report and said it was evaluating its ability to operate as a going concern.
Declining issues outnumbered advancers for a 1.91-to-1 ratio on the NYSE and 1.67-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and 13 new lows, while the Nasdaq recorded 50 new highs and 123 new lows.
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