Wall Street drops as hawkish Fed official comments weigh

  • Fed’s Bullard backs further rate hikes
  • Data shows that the US labor market remains tight
  • Cisco shares rise after Co raises full-year outlook
  • Macy’s jumps on raising its earnings forecast
  • Indices down: Dow 0.02%, S&P 0.31%, Nasdaq 0.35%

Nov 17 (Reuters) – Wall Street’s major indexes ended slightly lower on Thursday in a choppy session as hawkish comments from a U.S. Federal Reserve official and data showing the labor market remained tight led some investors to worry about a more aggressive rise in interest rates.

St. Louis Fed President James Bullard said the central bank needed to keep raising rates given that its tightening so far “has had only limited effects on observed inflation.”

Stocks have fallen in recent days after a strong month-long rally spurred by weaker-than-expected inflation reports that raised hopes the Fed would moderate its rate hikes.

“The Fed continues to talk, in general, about interest rates,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “There might be some disagreement on the pace. But interest rates aren’t going down anytime soon.”

Stocks pared their losses late in the session, but the major indexes still ended in negative territory.

The Dow Jones Industrial Average (.DJI) fell 7.51 points, or 0.02%, to 33,546.32, the S&P 500 (.SPX) fell 12.23 points, or 0.31%, to 3,946.56 and the Nasdaq Composite (.IXIC) fell 38.70 points, or 0.35%, to 11,144.96.

Data showed the number of Americans filing new claims for unemployment benefits fell last week, suggesting the labor market remained tight. A report on Wednesday detailed strong retail sales growth last month, indicating that the economy has been resilient to rate hikes.

Traders’ bets on a 75 basis point hike at the Fed’s next meeting soared to 19% from around 15% the day before, according to CME Group’s FedWatch tool. Most investors are still expecting a 50 basis point hike.

Cisco Systems (CSCO.O) Shares rose 5% after the company raised its full-year revenue and profit forecast as supply chain hurdles eased. The stock helped the S&P 500 information technology sector (.SPLRCT) register a gain of 0.2%.

Most S&P 500 sectors ended lower, however, with utilities (.SPLRCU) 1.8% loss and consumer discretionary (.SPLRCD) drop of about 1.3%.

In corporate news, Macy’s shares (MN) jumped 15% after the department store chain raised its full-year profit forecast on resilient demand for high-end clothing and beauty products.

Falling issues outnumbered rising ones on the NYSE by a ratio of 2.06 to 1; on the Nasdaq, a 1.65-to-1 ratio favored decliners.

The S&P 500 posted 1 new 52-week high and 1 new low; the Nasdaq Composite recorded 46 new highs and 169 new lows.

About 10.3 billion shares changed hands on US exchanges, compared to the daily average of 12.1 billion over the past 20 sessions.

Reporting by Lewis Krauskopf in New York, Bansari Mayur Kamdar, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Vinay Dwivedi, Arun Koyyur and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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