US stocks have closed lower for a second straight session after data indicating the labour market remains on solid ground dimmed hopes the Federal Reserve might have enough reason to begin reducing the size of its interest rate hikes.
A survey showed US job openings unexpectedly rose in September, suggesting that demand for labour remains strong even as the central bank has embarked on a path of aggressive rate hikes in an effort to bring down stubbornly high inflation.
Investors have been paying close attention to labour market data for any signs of weakening in the job market, as decreasing wage pressures and easing demand would help reduce inflation, giving the Fed the ammunition to begin decelerating with a 50-basis-point rate hike in December.
Growing expectations the central bank might have enough justification to begin slowing in December - partly due to data pointing to a weakening economy and a corporate earnings season that has been better than expected - helped stocks rally in October, with the Dow notching its biggest monthly percentage gain since 1976.
The sharp focus on labour market data overshadowed another report that showed US manufacturing activity grew at its slowest pace in nearly two-and-a-half years in October as rising rates cool demand for goods and pricing pressures on manufacturers lessened.
"That is the concern for the market is we know the Fed wants to slow down the labour market, they want to slow down hiring so demand drops in the economy, which will help inflation," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.
"From an employment standpoint things look really robust, though, and that is putting some pressure on stocks."
The Dow Jones Industrial Average on Tuesday fell 79.75 points, or 0.24 per cent, to 32,653.2, the S&P 500 lost 15.88 points, or 0.41 per cent, to 3,856.1 and the Nasdaq Composite dropped 97.30 points, or 0.89 per cent, to 10,890.85.
The Fed will release its policy statement on Wednesday and investors will look for any signals from chair Jerome Powell afterward that the bank is contemplating lower rate hikes.
Energy, up 0.99 per cent was the best-performing S&P sector, lifted by a gain in crude prices on an unverified report that China was considering lifting its strict COVID-19 regulations.
That also helped boost US-listed shares of Chinese firms such as JD.Com, up 3.08 per cent and Alibaba Group Holding , which gained 3.59 per cent.
Megacap growth names such as Amazon and Apple, which have struggled since the Fed began raising interest rates, were again under pressure, falling 5.52 per cent and 1.75 per cent, respectively.
Uber Technologies surged 11.97 per cent after giving an upbeat fourth-quarter profit view that also lifted shares of its peers Lyft Inc, up 3.48 per cent and DoorDash, up 3.61 per cent.
Pfizer rose 3.14 per cent after the drugmaker raised full-year sales estimates for its COVID-19 vaccine, while Eli Lilly fell 2.63 per cent after trimming its profit forecast.