Wall Street ended the day quietly as bond market pressure remained high owing to concerns over an overheated US labor market.
The S&P 500 fell 5.56 points to 4,258.19, a day before a highly awaited report on the labor market that might influence the Federal Reserve’s interest rate decision. The Dow Jones fell by 9.98 points, or to 33,119.57. The Nasdaq composite fell 16.18 points, or 0.1%, to 13,219.83.
Since the summer, stocks have suffered under the weight of rising Treasury rates in the bond market, which has reduced stock prices and crimped corporate earnings. Yields have risen as markets accept a new normal in which the Fed is expected to retain its main interest rate at a high level for an extended period of time in order to combat excessive inflation.
Treasury rates fluctuated on Thursday after a report indicated that fewer Americans claimed for jobless insurance last week than forecasters predicted. That indicates that fewer people are being laid off than planned, which is usually a good indication.
However, there is a concern that an overly robust employment market would put upward pressure on inflation. To artificially delay the employment market, the Fed hiked its key interest rate to its highest level since 2001.
“Even though the Fed has taken aggressive action to soften labor market conditions, businesses continue to hold on to workers,” said Rubeela Farooqi, chief US economist at High Frequency Economics.
A more thorough report on the total job market in the United States is expected later today, and analysts estimate it to indicate that hiring slowed to 163,000 jobs gained in September, down from 187,000 in August.
The 10-year Treasury rate fell after initially rising in response to the unemployment claims news. The 10-year Treasury note yield was 4.71%, down from 4.73% late Wednesday. It reached its greatest level since 2007 earlier this week.
The 10-year Treasury is the bond market’s focal point, and changes in its yield have repercussions across the economy. According to rates strategist at Bank of America, where it will go in the next three to six months has a broad range of possible outcomes. He also mentioned that the yield might fall back to 4% to 4.25% if subsequent data show the economy deteriorating enough to reduce inflation but not enough to precipitate a significant recession. However, he also stated in a BofA Global Research that it might reach 5.50% if economic data improves significantly and forces the Fed to continue rising rates.
A recent drop in the price of oil has provided some relief from inflation for both US families and the Federal Reserve. The price of a barrel of benchmark US crude has dropped substantially after surging from $70 in the summer to more than $93 last week. It slid another $1.91 to close at $82.31, a day after falling more than $5 for its worst day in almost a year. Brent crude, the worldwide benchmark, fell $1.74 per barrel to $84.07 per barrel.
Clorox sank 5.2% on Wall Street after the firm revealed the size of the loss it expects to incur in the current quarter as a result of a previously disclosed cybersecurity breach. The firm stated that its supplies were on track prior to the hack, which caused extensive interruptions.
Rivian Automotive fell 22.9% after the electric car manufacturer announced plans to raise $1.5 billion by issuing debt that might be converted into equity in the future.
Lamb Weston, which produces frozen fries, hash browns, and other potato products, came out on top. It increased by 8% after posting higher-than-expected earnings for the most recent quarter. The business also increased its profit prediction for the fiscal year, citing the benefits of rising product prices.
Indexes in foreign stock markets moved barely slightly throughout most of Europe and Asia. The Nikkei 225 in Japan was an exception, rising 1.8%. It has been one of the world’s better stock market this year.
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.