Wall Street falls as job openings data adds to rate hike jitters

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Wall Street’s main indexes fell for the third straight session on Tuesday as a sharp rise in job openings added to worries about the U.S. Federal Reserve’s aggressive approach to bring down inflation.

The benchmark S&P 500 index has slumped 5% since Fed Chair Jerome Powell last week reaffirmed the central bank’s determination to raise interest rates despite a slowing economy.

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Labor demand showed no signs of cooling as U.S. job openings rose to 11.239 million in July, while a separate report showed consumer confidence rebounded strongly in August after three straight monthly declines.

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All eyes are now on the August non-farm payrolls data on Friday.

“Normally, seeing companies wanting to hire more workers is a good thing … more jobs is more reason for the Fed to raise rates,” Bryce Doty, senior portfolio manager at Sit Investment Associates said in a note.

New York Fed President John Williams said on Tuesday he believes the central bank will raise its policy rate high enough to restrict growth and bring down inflation, and will then need to hold it there through the end of 2023.

Traders are pricing in a 70.5% chance of a third straight 75-basis point rate hike in September.

All S&P 500 sectors were trading in the red, with the energy sector down 3.8% as oil prices slid more than 5% on fuel demand woes.

The benchmark 10-year Treasury yield erased early morning losses to trade higher at 3.11%.

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Rate-sensitive megacap growth and technology stocks such as Microsoft Corp, Apple Inc and Nvidia Corp , fell between 1.0% and 2.5%.

At 12:28 p.m. ET, the Dow Jones Industrial Average was down 259.27 points, or 0.81%, at 31,839.72, the S&P 500 was down 40.44 points, or 1.00%, at 3,990.17, and the Nasdaq Composite was down 145.73 points, or 1.21%, at 11,871.94.

Both the S&P 500 and the Nasdaq have broken below their 50-day moving average. The S&P 500 also briefly fell below the 50% Fibonacci retracement level, a key technical indicator watched by analysts, between August highs and mid-June lows.

The CBOE Volatility index, also known as Wall Street’s fear gauge, rose for the third straight session and was last trading at 26.87 points.

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“It is really a continued concern about how aggressive the Fed will be and whether what we’re going through right now is simply a retest of the June low or are we headed for an even lower low,” said Sam Stovall, chief investment strategist at CFRA in New York.

Adding to worries, Taiwan’s military fired warning shots at a Chinese drone which buzzed an islet controlled by Taiwan near the Chinese coast.

Best Buy Co rose 2.6% after it reported a smaller-than-expected drop in quarterly comparable sales as steep discounts helped soften the blow to electronics demand from rampant inflation.

Twitter Inc dipped 1.8% as Tesla Inc Chief Executive Elon Musk sent a fresh letter to scrap the deal to buy the social media company after whistleblower claims.

Declining issues outnumbered advancers for a 3.83-to-1 ratio on the NYSE and a 2.67-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 16 new lows, while the Nasdaq recorded 7 new highs and 168 new lows.

(Reporting by Bansari Mayur Kamdar, Sruthi Shankar and Devik Jain in Bengaluru; Editing by Sriraj Kalluvila and Shounak Dasgupta)



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