Wall St falls for third session in a row on concerns about Fed rate hikes

A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., August 29, 2022. REUTERS/Brendan McDermid

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  • Best Buy sales beat estimates as discounts boost demand
  • The number of vacancies in July increases sharply
  • Dow down 1.02%, S&P 500 down 1.22%, Nasdaq down 1.45%

Aug 30 (Reuters) – U.S. stocks fell for a third straight session on Tuesday as a rise in job vacancies fueled concerns that the U.S. Federal Reserve has another reason to maintain its aggressive rate hikes to fight inflation.

The benchmark S&P 500 (.SPX) has fallen more than 5% since Federal Reserve Chairman Jerome Powell on Friday reaffirmed the central bank’s willingness to raise interest rates even in the face of a slowing economy. read more

The demand for labor showed no signs of cooling as the number of vacancies in the US rose to 11.239 million in July and the previous month was sharply revised upward. A separate report showed that consumer confidence picked up sharply in August after three straight monthly falls. read more

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“It flows into a strong labor market, it also points to no obvious concern from consumers, and it goes against what the market is really looking for,” said Andre Bakhos, managing member at Ingenium Analytics LLC in Plainsboro, New Jersey.

“You would normally interpret this as good news, but we have the inflation part which is the concern, and these kinds of numbers don’t sit well with trying to get inflation down, at least that’s the market’s perception.”

The data heightens the focus on August nonfarm payrolls data due on Friday.

The Dow Jones Industrial Average (.DJI) fell 327.54 points, or 1.02%, to 31,771.45, the S&P 500 (.SPX) lost 49.12 points, or 1.22%, to 3,981.49 and The Nasdaq Composite fell (8.73 points). 1.45% to 11,843.79.

New York Fed President John Williams said on Tuesday that the central bank will likely need to keep its key rate at around 3.5% and is unlikely to cut rates at all next year as it fights inflation.

However, Atlanta Fed President Raphael Bostic said in an essay published Tuesday that the Fed may “dial back” from its latest streak of 75 basis points if new data show inflation is “clearly” slowing while Richmond Fed President Thomas Barkin said the Fed’s pledge. getting inflation down to the 2% target will not necessarily result in a severe recession. read more

Traders are pricing in a 74.5% chance of a third straight rate hike of 75 basis points at the Fed’s September meeting.

Each of the 11 S&P 500 sectors was in negative territory, with the energy sector ( .SPNY ) down 3.27% as oil prices fell more than 5% on concerns that slowdowns in global economies could dampen demand. read more

The benchmark 10-year Treasury yield erased early morning losses to trade higher at 3.119%.

Price-sensitive megacap growth and technology stocks such as Microsoft Corp ( MSFT.O ), down 1.32%, and Apple Inc ( AAPL.O ), off 1.69%, were the biggest drags on the benchmark.

Both the S&P 500 and the Nasdaq have broken below their 50-day moving averages. The S&P 500 also briefly fell below the 50% Fibonacci retracement level from the June low to the August high, another key technical indicator that analysts saw as support.

SPX technical

The CBOE Volatility Index, also known as Wall Street’s fear gauge, rose for the third session in a row and was last traded at 26.92 points.

Adding to concerns, Taiwan’s military fired warning shots at a Chinese drone circling an islet controlled by Taiwan near the Chinese coast. read more

However, Best Buy Co ( BBY.N ) rose 2.25%, the biggest gainer on the S&P 500 after it reported a smaller-than-expected drop in quarterly comparable sales thanks to steep discounting. read more

Declining issues outnumbered advancing on the NYSE by a ratio of 4.83 to 1; on the Nasdaq a 2.92 to 1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 18 new lows; The Nasdaq Composite registered 7 new highs and 196 new lows.

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Reporting by Chuck Mikolajczak; Editing by David Gregorio

Our standards: Thomson Reuters Trust Principles.

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