© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., September 6, 2022. REUTERS/Brendan McDermid
By Herbert Lash, Ankika Biswas and Bansari Mayur Kamdar
(Reuters) – Shares on Wall Street closed lower on Wednesday, unable to sustain a rise late in the day, after data showed U.S. labor demand remained strong and Reserve officials government were sticking to their hawkish message that interest rates will stay higher for longer.
Stocks rebounded late in the day after data showed US labor demand remained strong. But Fed officials insisted rates would stay high to fight inflation, a message the market feared would lead to a hard landing and likely recession.
“Righting back, this is a favorable indicator for me that this rally could have legs,” said Sam Stovall, chief investment strategist at CFRA Research in New York.
“It also confirms that investors think, traders think there’s still a lot to do in this rally,” he said.
Private U.S. employers stepped up hiring in September, the ADP’s National Jobs Report showed on Wednesday, suggesting that rising rates and tighter financial conditions have yet to dampen labor demand. work as the Fed battles high inflation.
The Institute for Supply Management’s service industry employment gauge jumped in another sign that the workforce remains strong as the industry as a whole slowed slightly in September.
The Fed is expected to make a fourth straight rate hike of 75 basis points when policymakers meet Nov. 1-2, according to CME’s FedWatch tool.
San Francisco Fed President Mary Daly told Bloomberg TV in an interview that inflation was problematic and the US central bank would stay the course.
“The path is clear: we’re going to raise rates into restrictive territory and then keep them there for a while,” she said. “We are committed to bringing inflation down, staying the course until we are well and truly done.”
The benchmark rose 5.7% on Monday and Tuesday as Treasury yields fell sharply on weaker US economic data, the UK’s U-turn on proposed tax cuts rattled markets and lower-than-expected rate hikes in Australia.
Treasury yields climbed again on Wednesday after economic data failed to bolster budding hopes that the Fed might adopt less hawkish policy.
But the stock market was seen as oversold and investors stepped in, Stovall said.
“Prices are basically indicating that we might be seriously oversold and therefore we should take advantage of that because we might be surprised later,” he said.
According to preliminary data, the S&P 500 fell 9.81 points, or 0.20%, to end at 3,783.65 points, while the Nasdaq Composite fell 30.59 points, or 0.27%, to 11 145.81. The Dow Jones Industrial Average fell 58.24 points, or 0.14%, to 30,258.08.
The energy sector led the market higher, followed by information technology and healthcare.
The energy sector surged after the Organization of the Petroleum Exporting Countries and its allies agreed to cut the biggest oil production since the start of the COVID-19 pandemic, limiting supply in a market already tense.
Twitter Inc. (NYSE:) lost momentum online with its peers, a day after jumping 22% following billionaire Elon Musk’s decision to go ahead with his initial $44 billion bid to take the social media company private.
Twitter fell and Tesla (NASDAQ:) Inc, the electric car maker led by Musk, also slipped.
Exxon Mobil Corp (NYSE:), Apple Inc (NASDAQ:) and Microsoft Corp. (NASDAQ:) led the market higher.
