The New York Stock Exchange closed lower on Thursday after early signs that a US labor market may prove too strong for the inflation-concerned US central bank.
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While official jobs data for December will be released on Friday, the Dow Jones index fell 1.02% to 32,930.08 points, the Nasdaq fell 1.47% to 10,305.24 points and the broader S&P 500 by 1.16% to 3,808.10 points.
US private sector employers hired significantly more than expected with 235,000 jobs created instead of the 153,000 expected, according to the ADP monthly survey released Thursday.
The labor market therefore apparently remains very dynamic, which does not lead to a drop in wages, and therefore inflation.
“The ADP survey came out with better-than-expected numbers last month, largely because it tended to undervalue hiring over the past six months, which is why investors fear the jobs market isn’t going in the direction the Fed wants,” he said. Jack Ablin de Cresset told AFP. .
Analysts expect the Labor Department to register 210,000 new jobs for December after 265,000 in November. The unemployment rate is expected to remain stable at 3.7%, according to the Briefing.com consensus.
“Perhaps these estimates are too optimistic, if we take the viewpoint of the Fed anxious to fight inflation,” added the analyst.
“We are again where good news seems to be bad news,” he summarized, referring to job creation which is good for workers but a bad point for rising prices. .
The expert underlined that the labor market is so far the only sector that has been slightly affected by the tightening of the Fed’s monetary policy, which is raising the cost of money.
The stock market “remains nervous, wondering how long the Fed will maintain tight monetary policy,” Schwab’s analysts added.
Nine of the eleven S&P sectors closed in the red, led by the real estate sector (-2.78%), which is very sensitive to interest rates.
Bucking the trend, shares of online retail giant Amazon fell 2.37% to $83.12, its lowest level in four years.
Jeff Bezos’ group, which employs 1.5 million people globally and has taken over loudly since the pandemic, announced just over 18,000 job cuts, the largest workforce reduction on record since agency.
Shares of home improvement chain Bed Bath and Beyond fell 29.88% to $1.69. The share is at a thirty-year low while the brand, faced with falling attendances in its stores and inventory difficulties, has acknowledged that bankruptcy was not excluded.
Drugstore and pharmacy chain Walgreens fell 6.13% after reporting better-than-expected quarterly sales results, but weighed down by a massive $3.7 billion commitment to fund an amicable settlement that will settle lawsuits related to the opioid crisis.
American pharmaceutical companies and distributors have been accused for years of promoting prescription-only opioid painkillers.
On the bond market, ten-year rates rose slightly to 3.71% from 3.68%.
