US stocks sink as solid jobs data signals aggressive Fed

‘Labor market still too tight for cenbank’

NEW YORK, Nov 1, (AP): US stocks gave up early gains and turned lower on Wall Street after an unexpectedly strong report on the job market raised concerns that the Federal Reserve will need to keep the pressure on inflation with aggressive interest rate increases.

The S&P 500 fell 0.5% as of 11:34 a.m. Eastern. It had been up as much as 1% shortly after trading opened. The Dow Jones Industrial Average fell 166 points, or 0.5%, to 32,566 and the Nasdaq fell 0.5%.

Big technology stocks were the biggest weights on the market. The companies, with their big valuations, have more heft in pushing the broader market up or down. Also, rising interest rates tend to make the sector look less attractive because of its those high valuations. Apple fell 2.3%.

Small company stocks held up better than the rest of the market. The Russell 2000 rose 0.3%.

The Labor Department reported that U.S. job openings rose unexpectedly in September, suggesting that the labor market is not cooling as fast as the Fed hoped for as it tries to slow economic growth.

The latest jobs data, which comes ahead of a broader employment report on Friday, is disappointing for investors who are looking for signs that inflation is easing and that the Fed might consider tempering its interest rate increases.

“That really fuels the expectation that the Fed has to do more hiking,” said Jason Draho, head of asset allocation for the Americas at UBS Global Wealth Management. “The labor market is still too tight for the Fed.”

Wall Street is concerned that the central bank is being too aggressive in slowing the economy, running the risk that it could bring on a recession.

Long-term Treasury yields turned higher after the report in job openings came out and rose back near multiyear highs. Those high rates have helped push mortgage rates above 7% this year.

The yield on the 10-year Treasury rose to 4.05% from 3.93% earlier in the morning.

The yield on the two-year Treasury, which tends to reflect market expectations of future moves by the Federal Reserve, rose to 4.49% from 4.40%.

“The issue for investors is figuring out how long the hiking cycle will last,” Draho said. “(Fed Chair Jerome) Powell will want to leave all options on the table.”

Europe

In European trading at midday, Germany’s DAX added 1.3% and in Paris, the CAC40 surged 1.8%. Britain’s FTSE 100 jumped 1.6%.

The European Union’s statistics agency, Eurostat, reported Monday that inflation hit 10.7% in October, another record in the 19 countries that use the euro currency, fueled by high prices for natural gas and electricity due to Russia’s war on Ukraine.

Investors are also waiting for the U.S. government’s monthly employment report Friday for clues on whether the hot jobs market is cooling as inflation squeezes businesses. So far this year the labor market has remained tight, with unemployment around 50-year lows at 3.5% and companies adding jobs at a healthy clip.

Wall Street still has plenty of earnings to review from big companies this week. Pfizer shares rose 3% after it reported sales and profit that beat Wall Street targets. CVS reports on Wednesday and Starbucks releases its results on Thursday.

Shares of Abiomed jumped more than 50% in premarket after Johnson & Johnson announced it will spend $16.6 billion to buy the cardiovascular technology company.

Asia

In Asia overnight, Hong Kong jumped more than 5% and other world markets also advanced after a survey of Chinese manufacturing showed activity has improved.

The monthly manufacturing gauge from Caixin, a Chinese business news magazine, helped to counter renewed concerns about coronavirus outbreaks. It showed activity declined in October but at a slower rate than in the previous month.

The Hang Seng index in Hong Kong surged 5.2% to 15,455.27 after a comment circulated on social media saying, without citing any source, that the ruling Communist Party might set up a “reopening committee” to look at ways to wind down anti-virus controls that have disrupted trade and business.

A foreign ministry spokesman, Zhao Lijian, told reporters he was “not aware of what you just mentioned” when asked about the rumor.

In other Asian trading, the Nikkei 225 in Tokyo added 0.3% to 27,678.92, while the Kospi in Seoul jumped 1.8% to 2,335.22. Sydney’s S&P-ASX 200 gained 1.6% to 6,976.90. India’s Sensex advanced 0.4%. The Shanghai