VOT Research Desk
Nov 4
Analytics and Recommendations
Investors were anticipating a closely watched government report on the job market on Thursday, which could have an impact on the Federal Reserve’s next action in its fight to reduce inflation. As a result, stocks on Wall Street suffered additional losses and Treasury yields reached new highs for the first time in a long time.
The market pullback, which was led by technology stocks, came a day after the central bank raised its benchmark rate for the sixth time this year, signaling that it may need to keep raising rates for a while before it can successfully combat the highest inflation in decades.
The Dow Jones Industrial Average was down 0.5 percent, while the S&P 500 was down 1.1%.The Nasdaq composite, which is dominated by technology, ended the day 1.7% lower .The declines extended the fourth-day losing streak of the major indexes. Each of them is on track for a weekly loss.
Treasury yields increased as a result of expectations of higher interest rates, which weighed on stocks. The two-year Treasury note, which typically tracks expectations for future Fed actions, increased to 4.72 percent from 4.61 percent late Wednesday, reaching its highest level since 2007.
The 10-year Treasury yield increased from 4.09 percent late on Wednesday to 4.15 percent. Mortgage rates have more than doubled this year as a result of the rise in the 10-year Treasury yield, which continues to exert pressure on stocks.
The Fed on Wednesday added another kind sized rate increment and recommended that the speed of rate climbs might slow. The central bank also said that in order to control the worst inflation in decades, interest rates might need to go even higher than thought.
The most recent three-quarters of a percentage point increase by the central bank brings short-term interest rates to a range of 3.75 percent to 4 percent, which is their highest level in 15 years. Wall Street is split on whether the central bank will eventually raise rates to a range of 5.25 percent to 5.50 percent or 5.25 percent to 5.50 percent next year.
Not only do higher rates slow the economy by making it harder to borrow money, but they also make stocks look less appealing when compared to assets with lower risks like bonds and CDs.
Determinedly hot expansion has been provoking national banks all over the planet to likewise raise loan fees. The Bank of England announced its biggest increase in interest rates in three decades on Thursday. The increase is the largest since 1992 and the eighth in a row for the Bank of England. The markets in Europe and Asia ended mostly lower.
The S&P 500 in the United States lost 39.80 points to 3,719.89.The Dow lost 146.51 focuses to close at 32,001.25.To 10,342.94, the Nasdaq lost 181.86 points. Stocks of smaller businesses also lost ground. To 1,779.73, the Russell 2000 lost 9.41 points, or 0.5 percent.
The stocks of technology and communication services were among the market’s biggest weights. Warner Bros. Discovery and Apple both declined by 5.6%.
Gains in the energy, industrial, and other sectors were held back by these losses. Marathon Petroleum gained 3%, while Boeing gained 6.3%.
Investors had hoped that data on the economy would suggest that the Fed might ease up on raising rates .The concern is that the Federal Reserve will over-slow the economy and trigger a recession.
The Fed must continue to be aggressive, as evidenced by this week’s employment data, which came in hotter than anticipated. The government’s October jobs report will provide Wall Street with a more comprehensive update on Friday.
The Fed has not yet slowed down its efforts to combat inflation as a result of the slowdown in hiring and wage growth. The Federal Reserve could face pressure to keep raising interest rates if the October data show a stronger-than-expected rise in hiring or wages.
Non-farm employers added 200,000 jobs last month, according to the Labor Department. That would be the worst performance since December 2020, when 115,000 jobs were lost in the economy.
Investors will also be keeping an eye on the most recent consumer inflation data. The consumer price index report is scheduled to be released next week.
How far the Federal Reserve will have to go to reduce inflation will be entirely dependent on how the next two to three quarters turn out. This is so that the following six-month period may be determined using the CPI data and the labor report.
The most recent earnings reports from companies have also been closely watched on Wall Street. The reports have been mixed, and numerous businesses have expressed concern that operations will likely continue to be impacted by inflation.
Booking Possessions rose 2.7% subsequent to announcing solid second from last quarter monetary outcomes. After the operator of the investing app reported third-quarter earnings that exceeded Wall Street’s forecasts, Robinhood Markets experienced a gain of 8.2%.After providing investors with a low profit and revenue forecast, chipmaker Qualcomm saw its shares fall 7.7%.
