Wall Street falls as weak economic data fuels recession fears

April 4 (Reuters) – Wall Street fell on Tuesday as evidence of a cooling economy exacerbated concerns that the Federal Reserve’s campaign to curb decades of high inflation could lead to a deep downturn.

All three major stock indexes were lower mid-day after data showed U.S. job vacancies fell to their lowest level in nearly two years in February, suggesting the labor market was cooling, while factory orders fell for a second month in a row.

Data on Monday had also pointed to weakened US manufacturing activity.

“The number of vacancies is down, which makes people worry that hiring is too slow and that will be bad for the economy. That leads to recession fears,” said Sal Bruno, chief investment officer at IndexIQ in New York.

Bank stocks took a hit after JPMorgan Chase & Co ( JPM.N ) Chief Executive Jaime Dimon warned in a letter to shareholders that the U.S. banking crisis is ongoing and its impact will be felt for years.

Bank of America (BAC.N) and Wells Fargo & Co (WFC.N) fell more than 2%, and the S&P 500 banks index (.SPXBK) fell 2.3%.

Of the 11 S&P 500 sector indexes, seven, led by industrials (.SPLRCI), fell 2.01%, followed by a 1.57% loss in energy (.SPNY).

Caterpillar Inc ( CAT.N ), seen as bellwether for the Industrials sector, fell 5.1%.

Healthcare (.SPXHC) and utilities (.SPLRCU), which many investors expect will hold up better during an economic downturn, were among the few S&P 500 sector indexes to gain on Tuesday.

Interest rate futures trading shows bets are now tipping toward a Fed pause in May, with odds of a 25-basis-point rate hike at 42%, compared with nearly 60% before the data, according to CME Group’s Fedwatch tool.

In afternoon trade, the S&P 500 was down 0.56% at 4,101.58 points.

The Nasdaq fell 0.47% to 12,131.64 points, while the Dow Jones Industrial Average fell 0.65% to 33,383.70 points.

The S&P 500 and technology-heavy Nasdaq have risen by nearly 7% and 16% respectively so far in 2023.

Virgin Orbit Holdings Inc ( VORB.O ) fell nearly 26% after the satellite launch company filed for Chapter 11 bankruptcy because it was unable to secure long-term financing.

Shares in AMC Entertainment Holdings Inc ( AMC.N ) fell about 23% after the movie theater chain said it agreed to settle litigation and proceed with converting its preferred stock into common stock.

Shares in Digital World Acquisition Corp ( DWAC.O ) fell 5.3% after the SPAC linked to former U.S. President Donald Trump delayed filing its annual financial report.

Declining stocks outnumbered advancing ones within the S&P 500 (.AD.SPX) by a ratio of 3.5 to one.

The S&P 500 posted 12 new highs and no new lows; The Nasdaq registered 56 new highs and 204 new lows.

Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru and by Noel Randewich in Oakland, California; Editing by Arun Koyyur, Shounak Dasgupta and Deepa Babington

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