New York Nov 1 (BUS): Stocks pared early gains and turned lower on Wall Street after an unexpectedly strong labor market report raised concerns that the Federal Reserve will need to maintain pressure on inflation through aggressive interest rate increases.
The S&P 500 is down 0.5% after the first hour of trading. It rose by as much as 1% shortly after the trade opened. The Dow Jones Industrial Average fell 161 points, or 0.5 percent, to 32,576, and the Nasdaq fell 0.5 percent.
The Labor Department reported that US job opportunities rose unexpectedly in September, indicating that the labor market is not calming down as quickly as the Federal Reserve had hoped as it tries to slow economic growth, according to the Associated Press.
The latest jobs data, which comes ahead of Friday’s broader employment report, disappoints investors looking for signs that inflation is easing and that the Federal Reserve may consider easing interest rate increases.
Wall Street fears the central bank will be too aggressive in slowing the economy, risking the possibility of a recession. Long-term Treasury yields turned higher after the release of the job vacancy report and rose again near multi-year highs. These higher rates have helped push mortgage rates above 7% this year.
The yield on the 10-year Treasury rose to 4.04% from 3.93% earlier in the morning. The two-year Treasury yield, which tends to reflect market expectations of future moves by the Federal Reserve, rose to 4.50% from 4.40%.
Several major companies posted solid gains after earnings reports and encouraging prospects. Pfizer shares rose 2.9 percent after announcing strong results and raising its profit forecast for the year. Uber stock rose 15% after giving investors strong expectations for future bookings. Rival Lift rose 9.5 percent.
The Federal Reserve begins a two-day policy meeting that is expected to lead to its sixth interest rate hike of the year as the central bank battles the worst inflation in four decades. The widespread expectation is that the Fed will push another increase of three times the usual size.
After the latest hotter-than-expected jobs data, investors are now seeing a slightly more likely Fed to raise another massive interest rate at its December meeting, according to CME Group.
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