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Stock market today: Dow stumbles as strong data keeps Fed fears alive

Stock Markets Dec 05, 2022 04:18PM ET
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By Yasin Ebrahim

Investing.com -- The Dow slumped Monday as fresh data pointing to strength in the economy and further signs of inflation pressures stoked concerns about higher for longer interest rates ahead of the Federal Reserve's meeting next week.

The Dow Jones Industrial Average slipped 1.4%, or 482 points, the Nasdaq 1.9%, and the S&P 500 fell 1.7%.

Services activity, which has been an area of the economy flagged by the Fed as a key contributor to inflation, rose by more than expected in November, stoking fresh concerns about more hawkish Fed monetary policy measures.

ISM services data for November showed a jump to 56.5, well above expectations of 53.3, while prices paid index component of the report, a gauge of inflation, “remains sticky at a very high level,” Jefferies said in a note.

The Fed is expected to slow the pace of interest rates at its meeting next week, but recent data including the red-hot jobs report on Friday shows that “they are going to have to hold rates at a high level (sufficiently restrictive) for quite a while to get inflation back down to the 2% target,” Jefferies added.

Treasury yields rose as investors weigh up the prospect of higher for longer interest rates to bring down inflation, pressuring growth sectors of the market including tech and consumer stocks.

Tesla (NASDAQ:TSLA) fell 6% as the electric vehicle company is reportedly set to cut production of its Model Y vehicle by more than 20% at its Gigafactory in Shanghai.

VF Corporation (NYSE:VFC) also dragged consumer stocks lower after tumbling more than 11% as it warned on profit for the second half of the year and announced that its chief executive was departing.

Energy led the declined nearly 3% driven by a plunge in oil prices despite OPEC and its allies, known as OPEC+,  keeping production plans unchanged and China easing Covid restrictions over the weekend.

EQT Corporation (NYSE:EQT), Halliburton Company (NYSE:HAL), and Marathon Petroleum Corp (NYSE:MPC) led the losses in the energy sector.

Despite the weaker start to the week for stocks, some on Wall Street believe that the broader market may have bottomed, and are likely to continue to search for direction in the months ahead.

“Overall the markets are in basing / bottoming mode heading into 2023- although we believe the lows are either close or have already been established (October levels),” Janney Montgomery Scott said in a note.

Stock market today: Dow stumbles as strong data keeps Fed fears alive
 

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Comments (8)
Dave Jones
Dave Jones Dec 05, 2022 8:15PM ET
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So....the only thing keeping these markets going is the prospect of more free money from the fed? Is this where we are now?
Tom Marshall
Tom Marshall Dec 05, 2022 8:06PM ET
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Nice bubble size of that bubblegum XD
Warm Camp
Warm Camp Dec 05, 2022 5:42PM ET
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The market sold off, because the Fed raising by “only 0.5%” does not mean “pivot”, nothing even close to that. It could be clear even to the shallowest market commentaries on free websites.
MAP SR
MAP SR Dec 05, 2022 4:37PM ET
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Storyline out of a cartoon magazine
Erikke Evans
Erikke Dec 05, 2022 4:32PM ET
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Stumble is hopium perma-bulls.  It was a sell-off.
Karol Jur
Karol Jur Dec 05, 2022 4:32PM ET
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true
Nor Nor
Nor Nor Dec 05, 2022 4:31PM ET
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I hope to learn more
Gustav Bergström
Gustav Bergström Dec 05, 2022 4:30PM ET
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Oil, cotton, tabacco, opiate withdrawal medications, adderal and special insulins agains obesity is the future for USA. Weapons will do well too.
Tom Michaels
Tom Michaels Dec 05, 2022 4:27PM ET
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What fraud, goodnews, market stroked. Bull biscuits
 
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