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S&P 500 ends down as jobs data rekindles rate hike fear

Economy Aug 05, 2022 06:33PM ET
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© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 3, 2022. REUTERS/Andrew Kelly

By Noel Randewich and Devik Jain

(Reuters) - The S&P 500 ended lower on Friday, weighed down by Tesla (NASDAQ:TSLA) and other technology-related stocks after a solid jobs report torpedoed recent optimism that the Federal Reserve might let up its aggressive campaign to reign in decades-high inflation.

Data showed U.S. employers hired far more workers than expected in July, the 19th straight month of payrolls expansion, with the unemployment rate falling to a pre-pandemic low of 3.5%.

The report added to recent data painting an upbeat picture of the world's largest economy after it contracted in the first half of the year. That deflated investors' expectations that the Fed might let up in its series of rate hikes aimed at cooling the economy.

"This is all about the Fed. A very strong jobs report like we had puts pressure on the Fed to tighten for longer," said Adam Sarhan, chief executive of 50 Park Investments. "The market is scared the Fed is going to overshoot again. If they tighten too sharply and too long, that's going to cause a hard landing, a deep recession."

Tesla tumbled 6.6% and weighed heavily on the S&P 500 and Nasdaq. Facebook-owner Meta Platforms lost 2% and Amazon (NASDAQ:AMZN) fell 1.2%, also pulling down the index.

U.S. Treasury yields climbed as odds increased of a 75-basis-point interest rate hike in September. That helped bank stocks, with JPMorgan (NYSE:JPM) rising 3%, and helping the Dow Jones Industrial Average stay in positive territory.

Focus now shifts to inflation data due next week, with U.S. annual consumer prices expected to jump by 8.7% in July after a 9.1% rise in June.

Several policymakers have this week stuck to an aggressive policy tightening stance until they see strong and long-lasting evidence that inflation was trending toward the Fed's 2% goal.

Surging inflation, the war in Ukraine, Europe's energy crisis and COVID-19 flare-ups in China have rattled investors this year.

A largely upbeat second-quarter earnings season has helped the S&P 500 bounce back by about 13% from its mid-June lows after a rough first-half performance.

The S&P 500 declined 0.16% to end the session at 4,145.19 points.

The Nasdaq declined 0.50% to 12,657.56 points, while the Dow Jones Industrial Average rose 0.23% to 32,803.47 points.

For the week, the S&P 500 rose 0.4%, the Dow fell 0.1% and the Nasdaq added 2.2%.

  Lyft Inc (NASDAQ:LYFT) surged almost 17% after the ride-hailing firm forecast an adjusted operating profit of $1 billion for 2024 after posting record quarterly earnings.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.3-to-1 ratio.

The S&P 500 posted four new highs and 30 new lows; the Nasdaq recorded 60 new highs and 38 new lows.

Volume on U.S. exchanges was relatively light, with 10.6 billion shares traded, compared to an average of 10.8 billion shares over the previous 20 sessions.

S&P 500 ends down as jobs data rekindles rate hike fear
 

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Comments (40)
goutham kumar
goutham kumar Aug 05, 2022 11:43PM ET
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FOMC the confidence it needs to push ahead aggressively with its fight against inflation. At least a 50 bps rate hike at the September 20-21 FOMC meeting seems likely at this point in time, and yet another 75 bps hike could be in store if inflation over the next two CPI reports shows no signs of trending lower.
Dave Jones
Dave Jones Aug 05, 2022 11:38PM ET
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You know interest rates are meant to be good for a healthy economy right Mr. Reuters?
Dave Jones
Dave Jones Aug 05, 2022 5:50PM ET
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IF the only thing that keeps the markets going up is the free money from the fed then America is done for. So much for good old fashioned fundamentals to make a market go up or down. Now it's clearly dependent on funny money from the fed spigot. This is sad.
First Last
First Last Aug 05, 2022 5:50PM ET
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You started your speil with "IF", yet ended with "it's clearly".
First Last
First Last Aug 05, 2022 5:50PM ET
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* spiel
Kris Jay
Kris Jay Aug 05, 2022 5:18PM ET
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there is no market rate hike fear.   there will be another 75bps hike in September, maybe even more.  Its known as a fact rather than fear.   Traders have just ignored this for July and drove market up with a hope that Fed would start easing when we are not even half way through the fed rate hikes.
Ac Tektrader
Ac Tektrader Aug 05, 2022 4:47PM ET
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this market has reached the target I suggested some weeks ago at the 4150 to 4200 area some weeks ago . I suspected a rally to this area then a reversal and a test of the June 17 lows. but now it appears with today's action the s&p is signaling another leg up is very possible. I see carlos is still supporting the right wing propaganda and misinformation machine.
Marco cuevas
Marco cuevas Aug 05, 2022 4:37PM ET
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Good job market bad for america, pandemic everyone's at home bad for america, unemployment bad for a,erica....this is Americca
Brad Albright
Brad Albright Aug 05, 2022 4:37PM ET
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No, that's foreign agitators and America-haters.
John Avenetti
John Avenetti Aug 05, 2022 4:02PM ET
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temp summer jobs. give it up, the economy is sunk cause they want it that way. it's not free.
carlos guo
carlos guo Aug 05, 2022 3:11PM ET
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No matter how much people like First Last spam this site trying to gaslight for Brandon, even with 24/7 North Korea-style propaganda in his favor his approval has dropped more than any other president in modern history. American's feelings about the economy are at the lowest they have been in modern history. Inflation at record highs, wage growth well below inflation. Having to work multiple jobs to feed your family the same as you did under a single job with Trump is not a sign of success, it is a sign of socialists bringing breadlines and gualgs to the US. That was the goal of the COVID lockdowns, to turn the US into China 2.0.
Casador Del Oso
Casador Del Oso Aug 05, 2022 3:11PM ET
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Not to mention the business income tax increases that are working their way through Congress.
Steffen vdm
Steffen vdm Aug 05, 2022 3:11PM ET
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Rant number 117 from Carlos today
Charles Martin
Charles Martin Aug 05, 2022 3:11PM ET
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Marco cuevas
Marco cuevas Aug 05, 2022 2:49PM ET
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So first you all want people working, then you all WA t people unemployed even so gle mkthers....only in America do high jobs market mean bad stock market go figure what a racket this country is.
carlos guo
carlos guo Aug 05, 2022 2:49PM ET
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That is a false dichotomy, people want people to not have to work 2-3 jobs to keep up with inflation and feed their families. The GDP is down, inflation at 40+ year records, manufacturing productivity down. This has nothing to do with how many jobs are out there, but the state of wages and the economy. There is a reason that leftism ends in breadlines and gulags.
First Last
First Last Aug 05, 2022 2:41PM ET
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Stan, how has the NBER's Business Cycle Dating Committee's membership changed from before Biden's inauguration?
Stan Smith
Stan Smith Aug 05, 2022 2:41PM ET
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You're right.. the NBER a completely impartial and separate entity, impervious to politics and oblivious to any impacts its statements have on the upcoming midterms...lol
First Last
First Last Aug 05, 2022 2:41PM ET
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Stan Smith   I never claimed that,  just like Biden never changed the definition.  You guys gotta stop putting words into others' mouth just to have something to argue over.
First Last
First Last Aug 05, 2022 2:41PM ET
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Stan Smith   I can't be right about something I never said, just like Biden never changed the definition.  You guys gotta stop putting words into others' mouth just to have something to argue over.
 
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