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

Published 08/05/2022, 06:48 AM
Updated 08/05/2022, 06:33 PM
© 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

© 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.

© 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

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.

Latest comments

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.
You know interest rates are meant to be good for a healthy economy right Mr. Reuters?
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.
You started your speil with "IF", yet ended with "it's clearly".
* spiel
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.
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.
Good job market bad for america, pandemic everyone's at home bad for america, unemployment bad for a,erica....this is Americca
No, that's foreign agitators and America-haters.
temp summer jobs. give it up, the economy is sunk cause they want it that way. it's not free.
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.
Stan, how has the NBER's Business Cycle Dating Committee's membership changed from before Biden's inauguration?
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
  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.
  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.
For the banksters, the threat of rates hikes is bigger than Main St jobs
Just shows the level of humanity we're dealing with here. Being ruthless heartless and driven by pure greed doesn't make you a better human being no matter what Gordon Gekko says.
Bad news is good news. Good news is good news. War is peace. Ignorance is strength. Freedom is slavery.
Carlos: I've been commenting on the markets, but you only see party.
New headlines please
There are new articles.  No reason to keep re-writing old articles.
And QQQ is still under-performing SPY today
Powell did not say he want bad labor market to cool inflaltion. Never. People cooked that weird idea.
It's a good idea for the Fed to let people think it's willing to hiked rates more, to see more unemployment or recession happen.  That fear alone keeps inflation lowered.
The predictable intraday miracle "rally" unfolds in broad daylight, as the biggest investment JOKE in the world DEFRAUDS America in living color.  Assume the proper position for the weekend as usual.
And the market dips right after you whine able the "rally"
* about the
after lunch trader's have second thought. good news is not bad news at all. good news is good news. fed should welcome it and be proud
Good news is good new bad news in good news and nfp are cooked numbers but all is good
IRA stimulus should be another plus for stock market rally. oil price falling below 90 is plus. new normal inflation target is 4%. things are looking good
they will turn any data release into their narrative for the peasants.just phenomenal how corrupted our system actually is.
The peasants don't keep track of economic data.
When comments don't toe the party line, the app won't allow you to upvote them. Just saying.
Liar.  Your comment has an upvote.
Next see a place people complain too much people work while in fact inflation will not be 2% anymore except countries working all together again
Now people keep working then it sounds like bad news when people not working and trade then it’s good news?
What time will the next intraday miracle materialize out of thin air?
For you, every candle is a "miracle"
sop rise
fire 1 CEO to create 1000 new interns jobs openings
Carlos:  There's been no change in definition.   The gov't never used the simplistic definition used by the peanut gallery.
  That's standard practice for wiki when a lotta people keep making conflicting changes.  But conspiracy theorists gotta see more than that.
  Maybe Carlos had been editing the wiki entry.
check a dictionary see if that helps
There is a way to get interest free money for Wall Street. Issue stock. Sell stocks bought back.
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