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Wall St ends down as two-day rally fizzles on data, Fed message

Economy Oct 05, 2022 06:26PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 6, 2022. REUTERS/Brendan McDermid
 
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By Herbert Lash, Ankika Biswas and Bansari Mayur Kamdar

(Reuters) -Wall Street stocks closed lower on Wednesday, unable to sustain a late-day surge, after data showing strong U.S. labor demand again suggested the Federal Reserve will keep interest rates higher for longer.

Fed officials have insisted on aggressive rate tightening to battle inflation, a message the market has feared would lead to a hard landing and likely recession.

However, investors also sought bargains in a market that appears oversold. The forward price-to-earnings ratio is at 15.9, close to its historic mean, down from around 22 before the market's big slide this year.

"By battling back, to me that is a favorable indicator that this rally could have legs," said Sam Stovall, chief investment strategist at CFRA Research in New York.

"It too confirms that investors believe, traders believe, that there's still more to go in this rally," he said.

U.S. private employers stepped up hiring in September, the ADP National Employment report on Wednesday showed, suggesting rising rates and tighter financial conditions have yet to curb labor demand as the Fed battles high inflation.

The Institute for Supply Management's services industry employment gauge shot up in another sign labor remains strong as the overall industry slowed modestly in September.

The Fed is expected to deliver a fourth straight 75-basis-point rate hike when policymakers meet Nov. 1-2, the pricing of fed fund futures shows, according to CME's FedWatch tool.

San Francisco Fed President Mary Daly told Bloomberg TV in an interview that inflation is problematic and that the U.S. central bank would stay the course.

"The path is clear: we are going to raise rates to restrictive territory, then hold them there for a while," she said. "We are committed to bringing inflation down, staying course until we are well and truly done."

The benchmark S&P 500 index rose 5.7% Monday and Tuesday as Treasury yields slid sharply on softer U.S. economic data, the UK's turnaround on proposed tax cuts that had roiled markets and Australia's smaller-than-expected rate hike.

Treasury yields shot up again on Wednesday after the softer economic data failed to bolster budding hopes the Fed might pivot to a less hawkish policy stance.

Eight of the 11 major S&P 500 sectors fell, led by a 2.25% decline in utilities and 1.9% drop in real estate.

The energy sector led the market higher, up 2.06%, after the Organization of the Petroleum Exporting Countries and allies agreed to cut oil production the deepest since the COVID-19 pandemic began, curbing supply in an already tight market.

The Dow Jones Industrial Average fell 42.45 points, or 0.14%, to 30,273.87, the S&P 500 lost 7.65 points, or 0.20%, to 3,783.28 and the Nasdaq Composite dropped 27.77 points, or 0.25%, to 11,148.64.

Volume on U.S. exchanges was 10.43 billion shares, compared with the 11.64 billion average for the full session over the past 20 trading days.

Twitter Inc (NYSE:TWTR) lost momentum in line with its peers, a day after surging 22% on billionaire Elon Musk's decision to proceed with his original $44-billion bid to take the social media company private.

Twitter fell 1.35% and Tesla (NASDAQ:TSLA) Inc, the electric-car maker headed by Musk, also slid 3.46.

Declining issues outnumbered advancers on the NYSE by a 2.08-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and nine new lows; the Nasdaq Composite recorded 49 new highs and 128 new lows.

Wall St ends down as two-day rally fizzles on data, Fed message
 

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Comments (13)
Stephen Fa
Stephen Fa Oct 05, 2022 4:18PM ET
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Lot's of analyst price targets being lowered this week, likely from continued labor strength and more expected rate increases. Pivot talk is way too early.
Chad Richer Than You
Chad Richer Than You Oct 05, 2022 2:37PM ET
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Just assass.inate Abdulaziz Al Saud! We indirectly assass.inate Faisal before for oil-related reasons 💀💀
Dave Jones
Dave Jones Oct 05, 2022 1:50PM ET
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I don't think so pal
Mitchel Pioneer
Mitchel Pioneer Oct 05, 2022 1:28PM ET
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"Rallies" hold, and losses miraculously vanish, only in the BIGGEST INVESTMENT JOKE IN THE WORLD.
Dave Jones
Dave Jones Oct 05, 2022 1:28PM ET
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yeah
First Last
First Last Oct 05, 2022 1:28PM ET
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Only in every market ever.
soho electronics
soho electronics Oct 05, 2022 1:19PM ET
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this market is bs 400 points Dow goes up in 30 minutes.
Prabhat Negi
Prabhat Negi Oct 05, 2022 12:52PM ET
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bloody fed is the manipulator ... they pumping and dumping so that they can take money off the market .. easier way to reduce inflation by getting retails rekt .. bastards !
Dave Jones
Dave Jones Oct 05, 2022 12:52PM ET
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how did you get that one in?
Kris Jay
Kris Jay Oct 05, 2022 12:47PM ET
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"I could tell from the look in nPowell's eyes when he was speaking.  His words were, the Fed would hike rates until inflation was 2%, and it was still 8.5%, but i could tell from his eyes he was going to ease and pivot soon" -  post from reddit trader
Prison Mike
Prison Mike Oct 05, 2022 12:47PM ET
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Credible source
Casador Del Oso
Casador Del Oso Oct 05, 2022 12:47PM ET
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Thanks for posting this!
Kris Jay
Kris Jay Oct 05, 2022 12:47PM ET
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Prison Mike  dont misunderstand, i dont agree with it.  that is the craziness we have.  they are now down to eyes and body language in trying to assert that the Fed will pivot due to "something", "something's going to break",  "economy bad", "November elections", etc.  Charts and data no longer needed, Jim Cramer type hunches is all they need.
Mitchel Pioneer
Mitchel Pioneer Oct 05, 2022 12:28PM ET
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How about that.  Two 800 point "rallies" completely void of intraday volatility, yet the magic show reappears during the loss.  BIGGEST INVESTMENT JOKE IN THE WORLD.
First Last
First Last Oct 05, 2022 12:28PM ET
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There was intraday volatility
Tom Michaels
Tom Michaels Oct 05, 2022 12:18PM ET
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Believe this and they'll show you another one. All MANIPULATION.
Stephen Fa
Stephen Fa Oct 05, 2022 11:55AM ET
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Welcome to the Democrat's and establishment's rent based economy. You don't get to own much.
John Hill
John Hill Oct 05, 2022 11:55AM ET
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carlos guo Joe Biden and Nancy pelosing are listening Carlos!
 
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