U.S. stocks move into negative territory following April job-market data


U.S. stock indexes lost early gains on Wednesday, at the start of a new month of trading, after data on the manufacturing sector showed rising costs were still a problem, as the Federal Reserve begins reducing its nearly $9 trillion balance sheet.

How are stock indexs trading?
  • The Dow Jones Industrial Average  DJIA, -0.60% lost 213 points, or 0.7%, to 32,771.
  • The S&P 500 SPX, -0.73% were down 28 points, or 0.7%, to 4,104
  • The Nasdaq Composite COMP, -0.79% declined 31.5 points, or 0.3%, to 12,049

On Tuesday, the Dow industrials DJIA, -0.60% fell 222.84 points, or 0.7%, to close at 32,990.12, snapping six-straight sessions of wins. The S&P 500  SPX, -0.73% fell 0.6% to 4,132.15, and the Nasdaq Composite  COMP, -0.79% finished down 0.4% at 12,081.39, with both indexes snapping three consecutive days of gains.

Read: The man who seized one of Argentina’s ships now warns there will be a wave of emerging-market defaults

What’s driving the market?

It’s a economic data-heavy day. The Institute for Supply Management’s Manufacturing PMI, a closely followed index of U.S.-based manufacturing activity, rose to 56.1% in May from 55.4% in the prior month, the research group said Wednesday. Economists polled by The Wall Street Journal had forecast a decline to 54.5%.

Meanwhile, U.S. job openings fell to 11.4 million in April from a record 11.9 million in the previous month. About 4.4 million workers quit jobs in April, while the job-quitting rate stayed unchanged at 2.9%.

“Everything is showing that the economy is still doing pretty well. And that is supporting the idea that the Fed could continue with this aggressive tightening path, which is probably why we’re seeing stocks turned negative here,” Edward Moya, senior market analyst at OANDA, said in an interview.

Investors are also expecting St. Louis Fed President James Bullard to speak at 1 p.m. ET and the Fed to publish its Beige Book on economic conditions later in the session.

As well, investors will be keeping an eye on the liquidity impact of shrinking of the Fed’s massive balance sheet, which starts Wednesday and is aimed in part at helping fight high inflation.

“Uncertainty over the impact of Fed QT that kicks off today and ramps up to full force over the next three months to a pace of $95 billion/month could also prove a factor weighing on sentiment,” according to a note by Saxo Bank strategists.

Read: Fed’s quantitative tightening is about to arrive: What that might mean for markets

U.S. Treasury Secretary Janet Yellen admitted in an interview Tuesday that she was “wrong” last year in believing U.S. inflation would not pose a long-term problem, but President Joe Biden said he would leave it to the Fed to solve the inflation problem.

Elsewhere, Atlanta Fed President Raphael Bostic told MarketWatch in an exclusive interview on Tuesday that any September “pause” in the central bank’s push to raise interest rates shouldn’t be construed as a “Fed put,” or sign that the central bank will come to the rescue of markets.

Earnings reports after the market close are expected from meme stock GameStop Corp. GME, -3.83%, pet products retailer Chewy Inc. CHWY, -5.48%, and on the tech side, NetApp Inc. NTAP, +0.76% and Hewlett Packard Enterprise Co. HPE, +1.23%

The yield on the 10-year Treasury  TMUBMUSD10Y, 2.944%  note rose 8.2 basis points to 2.922% on Wednesday, according to Dow Jones Market Data.

U.S. crude oil prices CL.1, +1.65% were up another 1.6% to $117.40 a barrel and international benchmark Brent BRN00, +1.66% rose 1.6% to $117.50. Oil prices rose Tuesday after the EU slapped new sanctions on Russian crude, but pulled back after The Wall Street Journal reported some members of the OPEC were considering suspending Russia from oil-production targets.

What companies are in focus?
How are other assets trading?
  • The ICE U.S. Dollar Index  DXY, +0.80%,  a measure of the currency against a basket of six major rivals, was up 0.6%.
  • Bitcoin BTCUSD, -0.81% was trading about 2% lower at $31,009.
  • Gold for August delivery GC00, +0.07% GCQ22, +0.07% fell 0.2% to $1,844.90 an ounce.
  • In European equities, the Stoxx Europe 600  SXXP, -1.04% fell 0.8% and London’s FTSE 100  UKX, -0.98% edged down 0.7%.
  • In Asia, the Shanghai Composite  SHCOMP, -0.13% closed down 0.1%, the Hang Seng Index  HSI, -0.56% fell 0.6% in Hong Kong, and Japan’s Nikkei 225  NIK, +0.65% rose 0.7%.

This article was originally published by Marketwatch.com. Read the original article here.

Previous articleGold ekes out gain despite rise in Treasury yields
Next articleThe Fed: Fed is in danger of losing control of public expectations of future inflation, Bullard said


Please enter your comment!
Please enter your name here