Major Wall Street indexes closed more than 1% down on Thursday after fresh evidence of a tightening job market dashed investors’ hopes that the Federal Reserve could soon end its rate-hiking cycle as the attention remains on inflation.
Thursday’s national jobs report showed a stronger-than-expected rise in private employment in December. Another report showed that weekly jobless claims fell last week.
The number of employees in the private sector increased by 235,000 last month, led by small and medium-sized businesses, according to data from the ADP Research Institute in collaboration with Stanford’s Digital Economy Lab. The number beat all but one forecast in a Bloomberg poll of economists.
Another set of data on Wednesday showed a moderate decline in US job opportunities. While a strong job market is generally welcomed as a sign of economic strength, investors currently see it as a reason the Fed needs to keep interest rates high.
The Standard & Poor’s 500 index lost 44.74 points, or 1.16%, to close at 3,808.23 points, while the Nasdaq Composite Index lost 153.53 points, or 1.47%, to 10,305.23 points. The Dow Jones Industrial Average fell 339.18 points, or 1.02%, to 32,930.59 points.
In addition, the number of Americans filing new jobless claims fell to a three-month low last week, while layoffs fell 43% in December.
The Labor Department said Thursday that first-time applications for state unemployment benefits fell by a seasonally adjusted 19,000 single-digits to 204,000 in the week ended Dec. 31, the lowest level since late September. Economists polled by Reuters expected 225,000 questions.
