Stocks extend losses after three-week selloff

U.S. stocks fell in a choppy post-Labor Day session on Tuesday as traders remained nervous ahead of the Federal Reserve’s next policy move later this month.

The benchmark S&P 500 fell 0.4%, while the Dow Jones Industrial Average fell 0.5%, or about 170 points. The tech-heavy Nasdaq Composite led the declines, falling 0.7%. The moves come after three consecutive weeks of losses for the major averages.

Equity losses resumed after new data emerged showing U.S. services activity gained momentum in August, a sign to investors that Fed officials may proceed with a bigger hike rates of 75 basis points on September 21.

The Institute for Supply Management said its non-manufacturing PMI rose to 56.9 last month from 56.7 in July, the second consecutive monthly increase after a three-month decline.

Immediately after the results, the CME tool FedWatch reflected a new high probability – a 74% probability – that the Federal Reserve will raise interest rates by an additional 0.75%.

Treasury yields rose as investors await the central bank’s next move. The benchmark 10-year note climbed to 3.338%, while the 2-year Treasury note rose to 3.499%, its highest level since 2007.

Oil prices fell slightly after a temporary rally on the heels of OPEC+’s first supply cut in more than a year as the group struggles to manage global crude markets. West Texas Intermediate crude oil fell to $86.77 a barrel while Brent futures fell to $92.65 a barrel.

In the cryptocurrency markets, Bitcoin (BTC-USD) once again slipped below the $20,000 level.

Bed Bath & Beyond Shares (BBBY) plunged 18.4% in early trading Tuesday morning. Last week, the home goods retailer announced in a strategic update that it would be laying off staff and closing around 150 stores as part of an effort to turn around its struggling business.

Reports surfaced over the weekend that the company’s chief financial officer, Gustavo Arnal died by suicide Friday afternoon after falling from a skyscraper in the Tribeca neighborhood of New York known as the “Jenga” tower. Prior to his death, Arnal was named in a $1.2 billion shareholder lawsuit alleging his involvement in a “pump and dump” scheme.

A shopping cart is seen at a Bed Bath & Beyond store in Manhattan, New York, U.S., June 29, 2022. REUTERS/Andrew Kelly

“The company is in the early stages of assessing the complaint, but based on current knowledge, the company believes the claims are without merit,” a spokesperson for the company said. Bed Bath & Beyond tells Yahoo Finance.

Acquisition of the digital world (DWAC) shares plunged more than 11% after the special-purpose acquisition company set to merge with former President Donald Trump’s social media platform failed to garner enough shareholder support to extend the deadline for concluding the agreement.

Tuesday’s decisions come after the Department of Labor released its latest monthly jobs report for August on Friday. The US economy added 315,000 jobs last as the unemployment rate hit 3.7%, according to government data.

“The modest slowdown in job growth in August may be welcomed by the Fed, but it will not prevent further significant rate hikes in the months ahead,” Nancy Vanden Houten and Kathy Bostjancic said. Oxford Economics in a note Friday. “Fed Chair Powell made it clear last week that the FOMC plans to push rates well into restrictive territory to bring inflation down and prevent a stall in inflation expectations.”

Bank of America strategists led by Michael Hartnett warned Friday of a “fast inflation shock” and a “slow recession shock” as investors anticipate continued monetary tightening from the Federal Reserve.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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