Labour market conditions stay tight, Wall Street slips

Wall Street’s main indexes have fallen after latest data suggested labour market conditions remain tight, while investors assessed minutes from the Federal Reserve’s July meeting that indicated a less aggressive monetary policy tightening path.

Eight of the 11 major S&P 500 sectors declined in early trading, with consumer discretionary and communication services stocks leading losses.

Labor Department data showed the number of Americans filing new claims for unemployment benefits fell last week and data for the prior period was revised sharply down.

“Jobless claims fell again this week, showing the strength of the labour market,” said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

“Unfortunately, what’s good for the American worker is bad for the Fed’s attempt to being inflation back down to two per cent.”

Traders are still seeing a slightly greater probability of the Fed raising rates by 50 basis points in Septe mber, rather than a third 75 basis-point hike.

“I would characterise yesterday’s release of the minutes from last meeting really less hawkish,” said Art Hogan, chief market strategist at B Riley Wealth.

Data showing softer-than-expected inflation in July has sparked a risk-on rally in Wall Street in the last few weeks, with focus now on the Fed’s annual Jackson Hole symposium next week.

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Either a 50 bps or 75 bps rate hike in September would be a “reasonable” way to get short-term borrowing costs to a little over three per cent by year end and a little higher than that in 2023, San Francisco Federal Reserve Bank President Mary Daly said on Thursday.

The Fed has lifted its benchmark interest rate by 225 bps so far this year to control four-decades high inflation.

In early trading on Thursday, the Dow Jones Industrial Average was down 97.62 points, or 0.29 per cent, at 33,882.70 while the S&P 500 was down 8.11 points, or 0.19 per cent, at 4,265.93.

On another hand, the Nasdaq Composite was down 46.37 points, or 0.36 per cent, at 12,891.75.

The tech-heavy Nasdaq has bounced nearly 22 per cent from its mid-June lows, while the benchmark S&P 500 has risen 17 per cent, supported by upbeat results from corporate America.

However, retail earnings have been mixed so far, with encouraging reports from Walmart and Home Depot earlier this week.

Meanwhile, Target’s profit slump dragged the retail sector down 1.2 per cent on Wednesday.

Kohl’s Corp slid four per cent after the retailer cut its full-year sales and profit forecasts.

Verizon Communications Inc declined 2.5 per cent after MoffettNathanson downgraded the telecom operator’s shares.

Declining issues outnumbered advancers for a 1.13-to-1 ratio on the NYSE and a 1.45-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and 29 new lows, while the Nasdaq recorded 26 new highs and 31 new lows.

With AAP. (Content has been tweaked for style and length purposes.)