NEW YORK, Nov 1 (Reuters) – U.S. stocks closed lower for a second straight session on Tuesday after data indicating the labor market remained on a solid footing dampened hopes that the Federal Reserve could have enough reasons to start scaling back its interest rate hikes .
A survey showed U.S. job vacancies rose unexpectedly in September, suggesting labor demand remains strong even as the central bank embarked on a course of rate hikes aggressive measures to reduce stubbornly high inflation.
Investors have been paying close attention to labor market data for any signs of a weaker labor market as lower wage pressures and easing demand would help reduce inflation, giving the Fed the ammunition to begin to slow with a 50 basis point rate hike in December.
Growing expectations that the central bank might have sufficient justification to start easing in December – in part due to data pointing to a weakening economy and a better-than-expected corporate earnings season – helped stocks rally. recover in October as the Dow Jones reached its highest monthly percentage gain since 1976.
The focus on labor market data overshadowed another report that showed U.S. manufacturing activity grew at its slowest pace in nearly 2½ years in October as rising rates cooled demand for goods and pricing pressures on manufacturers diminishing.
“That’s what the market is concerned about is that we know the Fed wants to slow down the labor market, they want to slow down hiring so that demand goes down in the economy which will contribute to inflation” , said Anthony Saglimbene, chief market strategist at Ameriprise Financial. in Troy, Michigan.
“From an employment perspective, things look really robust, and that’s putting some pressure on stocks.”
The Dow Jones Industrial Average (.DJI) fell 79.75 points, or 0.24%, to 32,653.2, the S&P 500 (.SPX) lost 15.88 points, or 0.41%, to 3,856.1 and the Nasdaq Composite (.IXIC) fell 97.30 points, or 0.89%, to 10,890.85.
The Fed is expected to release its policy statement at 2 p.m. EDT (1800 GMT) on Wednesday, and investors will be watching closely for any signal in Fed Chairman Jerome Powell’s statement or comments that the central bank is considering to reduce its rate hikes.
Energy (.SPNY), up 0.99%, was the best performing S&P sector, lifted by a rise in crude prices on an unverified report that China was considering lifting its strict regulations on the COVID-19.
It also helped boost US-listed shares of Chinese companies such as JD.Com, up 3.08% and Alibaba Group Holding, which gained 3.59%.
Megacap growth names such as Amazon (AMZN.O) and Apple (AAPL.O), which have struggled since the Fed began raising interest rates, came under pressure again, falling respectively 5.52% and 1.75%.
Uber Technologies (UBER.N) jumped 11.97% after reporting upbeat fourth-quarter earnings that also lifted shares of peers Lyft Inc (LYFT.O), up 3.48% and DoorDash (DASH.N), up 3.61%.
Pfizer (PFE.N) rose 3.14% after the drugmaker raised full-year sales estimates of its COVID-19 vaccine, while Eli Lilly fell 2.63% after cut its profit forecast.
Volume on U.S. exchanges was 11.11 billion shares, compared to an average of 11.45 billion for the full session over the past 20 trading days.
Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.56 to 1; on the Nasdaq, a ratio of 1.29 to 1 favored advancers.
The S&P 500 posted 24 new 52-week highs and eight new lows; the Nasdaq Composite recorded 120 new highs and 110 new lows.
Reporting by Chuck Mikolajczak; edited by Jonathan Oatis
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