Wall Street down sharply as labour market strength stokes rate hike fears

NEW YORK: Wall Street’s main indices ended sharply lower on Thursday (July 6) in a broad sell-off after data showing a strong labour market boosted bond yields and fanned fears the Federal Reserve will be aggressive in raising US interest rates.

The Dow Jones Industrial Average fell 366.38 points, or 1.07%, to 33,922.26, the S&P 500 lost 35.23 points, or 0.79%, to 4,411.59 and the Nasdaq Composite dropped 112.61 points, or 0.82%, to 13,679.04.

The S&P 500 posted its biggest daily percentage drop since May 23. The Dow logged its biggest single-day fall since May 2.

Private payrolls surged far more than expected in June, data showed, suggesting the labour market remained solid despite growing risks of a recession. A separate report showed US job openings dropped in May, but remained at elevated levels.

A day before the monthly US employment report, evidence of a solid laboUr market spurred expectations the Fed will keep interest rates higher for longer to tame stubborn inflation.

“We don’t see any softening in the labour market,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “The Fed doesn’t have to worry about the jobs market. When you look at their mandate, they have no reason not to keep hiking and to keep hiking for a while.”

All 11 S&P 500 sectors ended down. Energy led declines among the sectors, dropping about 2.5%, while consumer discretionary slumped nearly 1.7%.

Gains in megacap stocks mitigated declines for the major indices, which ended above their session lows. Microsoft rose 0.9% while Apple was up 0.3%.

Source: The Sun Daily

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