Wall Street slides on strong jobs data

Wall Street’s main indexes have slipped after stronger than expected jobs data fuelled expectations of another big interest rate hike by the US Federal Reserve later this month.

The Labor Department’s report showed non-farm payrolls rose by 372,000 jobs in June, higher than the estimated rise of 268,000 jobs, according to a Reuters poll of economists.

The report also showed jobless rate remained near pre-pandemic lows at 3.6 per cent and average hourly earnings rose 0.3 per cent after gaining 0.4 per cent in May, all pointing to strength in the labour market.

“Certainly, it solidifies the view that there’s going to be a 75-basis-point increase in the next two weeks,” said Tom Plumb, portfolio manager of the Plumb Balanced Fund.

“We are still where bad news is good news and good news is bad news… that’s going to be the case until there’s some perception that the Fed has accomplished or is accomplishing their goal of moderating the growth of the economy.”

Atlanta Fed President Raphael Bostic, until recently among the central bank’s most dovish policymakers, said on Friday he “fully” supports another 75 basis point rate rise later this month.

Fed Governor Christopher Waller and St Louis Fed President James Bullard said on Thursday they would support another 75-basis-point rate increase but forecast a downshift to a slower pace afterward.

After a brutal first half of the year, US stock markets started July on a solid footing as investors took relief from easing commodity prices and the Fed hinting at a more tempered program of rate hikes amid concerns of a recession.

The S&P 500 and the Nasdaq recorded their fourth successive higher close on Thursday while the three main indexes were on track to post weekly gains.

Rate-sensitive shares of high-growth companies such as Microsoft Corp, Amazon.com Inc and Nvidia Corp fell nearly 1.0 per cent as US Treasury yields jumped.

In early trading, the Dow Jones Industrial Average was down 68.69 points, or 0.22 per cent, at 31,315.86, the S&P 500 was down 18.45 points, or 0.47 per cent, at 3,884.17, and the Nasdaq Composite was down 87.57 points, or 0.75 per cent, at 11,533.78.

Levi Strauss rose 2.1 per cent after the company’s second-quarter results beat estimates, helped by strong demand for its denim jeans and jackets.

Twitter Inc fell 4.6 per cent after a report said Elon Musk’s deal to buy the social media company is in “serious jeopardy”.

GameStop Corp tumbled 7.5 per cent after the video game retailer said it had terminated the employment of Chief Financial Officer Michael Recupero.

Declining issues outnumbered advancers for a 2.00-to-1 ratio on the NYSE and a 1.52-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows while the Nasdaq recorded eight new highs and 11 new lows.