(New York) The New York Stock Exchange stumbled on Thursday after strong private employment numbers ignited bets on further Fed rate hikes and pushed bond yields higher ahead of Friday’s official jobs report. .
The Dow Jones index finally dropped 1.07% to 33,922.26 points, after losing up to 1.50% in session. The NASDAQ fell 0.82% to 13,679.04 points and the S&P 500 fell 0.79% to 4411.59 points.
Bond rates jumped to more than 5.10% in session for the two-year rate, the highest since 2006, on the eve of the real estate and financial crisis.
Job creations in the private sector in June in the United States, according to the ADP/Standford Lab survey, were surprisingly strong, immediately dragging down the indices.
What is good news for employment is less good news for investors. They fear that the US central bank will raise rates even further to calm this overheating of hiring which can feed inflation.
At 497,000, job creations in the private sector in June were twice as numerous as expected. “These figures opened our eyes. It was a bit of a shock to the market,” said Steve Sosnick of Interactive Brokers.
The ADP survey “is an imperfect tool, but a leap like this was hard to ignore,” the analyst added.
If the job market remains so dynamic, that means “that a rise in rates is coming at the next meeting” on July 25 and 26: “there is a 90% chance that we will have a rise in rate in July and 50% also in September”, according to the calculations of CME Fedwatch, recalled Mr. Sosnick.
Investors are nervous about these job market numbers because on Friday, just before the market opens, the Labor Department will release its June numbers.
Analysts forecast 220,000 new hires against 339,000 in May with an unemployment rate of 3.6% against 3.7% the month before.
By selling on Thursday, “the market was right to anticipate that Friday’s figure will be stronger than expected,” Mr. Sosnick further commented.
To add to the message about further tightening of the Fed, a member of the Monetary Committee, Lorie Logan, president of the Dallas Fed, estimated that the Federal Reserve should continue with rate hikes.
Given the economic environment, “the Monetary Committee must pursue a more restrictive policy in order to bring inflation back to target in a sustainable and timely manner,” said Mr.me Logan, pointing out that she was in the camp of those who favored another hike in June when the Fed finally decided to take a break.
The VIX index, said of fear, because it reflects market volatility, had a jolt, at its highest for a month.
As for values, no sector was spared from the red, from energy (-2.45%) to real estate (-0.60%) via communication services (-1.21 %).
JetBlue loses altitude
Meta fell 0.81% as Facebook’s parent company launched a new social network, Threads, which aims to rival Twitter.
The application, launched Wednesday at 7 p.m. (Eastern time) in 100 countries and which currently works without advertising, is the biggest challenge to Twitter, owned by Elon Musk, already weakened by a series of adventures. . On its first day, the application attracted 30 million subscribers.
Tesla lost 2.10%, Google -1.39% and Amazon -1.55%.
The data analysis specialist Palantir fell 3.63%, the high level of the action inflated since the beginning of the year by the enthusiasm of the markets for artificial intelligence and sparked profit taking.
The American airline JetBlue lost altitude (-7.18%) to 8.66 dollars, after having decided to give up its partnership with American Airlines after the federal justice in mid-May ordered the two allies to put end to their collaboration.
The boss of the group said internally that JetBlue wanted to focus on its merger with Spirit.