Wall St mixed as rate hike fears resurface

·3-min read

The S&P 500 has ended lower, weighed down by Tesla and other technology-related stocks after a solid jobs report torpedoed recent optimism that the Federal Reserve might let up its aggressive campaign to reign in decades-high inflation.

Data showed US employers hired far more workers than expected in July, the 19th straight month of payrolls expansion, with the unemployment rate falling to a pre-pandemic low of 3.5 per cent.

The report added to recent data painting an upbeat picture of the world's largest economy after it contracted in the first half of the year.

That deflated investors' expectations that the Fed might let up in its series of rate hikes aimed at cooling the economy.

"This is all about the Fed. A very strong jobs report like we had puts pressure on the Fed to tighten for longer," said Adam Sarhan, chief executive of 50 Park Investments.

"The market is scared the Fed is going to overshoot again. If they tighten too sharply and too long, that's going to cause a hard landing, a deep recession."

Tesla tumbled 6.6 per cent and weighed heavily on the S&P 500 and Nasdaq.

Facebook-owner Meta Platforms lost 2.0 per cent and Amazon fell 1.2 per cent, also pulling down the index.

US Treasury yields climbed as odds increased of a 75-basis-point interest rate hike in September.

That helped bank stocks, with JPMorgan rising 3.0 per cent, and helping the Dow Jones Industrial Average stay in positive territory.

Focus now shifts to inflation data due next week, with US annual consumer prices expected to jump by 8.7 per cent in July after a 9.1 per cent rise in June.

Several policymakers have this week stuck to an aggressive policy tightening stance until they see strong and long-lasting evidence that inflation was trending toward the Fed's 2.0 per cent goal.

Surging inflation, the war in Ukraine, Europe's energy crisis and COVID-19 flare-ups in China have rattled investors this year.

A largely upbeat second-quarter earnings season has helped the S&P 500 bounce back by about 13 per cent from its mid-June lows after a rough first-half performance.

The S&P 500 declined 0.16 per cent to end the session at 4,145.19 points, the Nasdaq declined 0.50 per cent to 12,657.56 points while the Dow Jones Industrial Average rose 0.23 per cent to 32,803.47 points.

For the week, the S&P 500 rose 0.4 per cent, the Dow fell 0.1 per cent and the Nasdaq added 2.2 per cent.

Lyft Inc surged almost 17 per cent after the ride-hailing firm forecast an adjusted operating profit of $US1 billion ($A1.4 billion) for 2024 after posting record quarterly earnings.

Advancing issues outnumbered falling ones within the S&P 500 by a 1.3-to-1 ratio.

The S&P 500 posted four new highs and 30 new lows; the Nasdaq recorded 60 new highs and 38 new lows.

Volume on US exchanges was relatively light, with 10.6 billion shares traded, compared to an average of 10.8 billion shares over the previous 20 sessions.

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