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Wall Street slips as jobs growth boosts rate hike bets By Reuters

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, July 26, 2022. REUTERS/Brendan McDermid

By Shreyashi Sanyal and Ankika Biswas

(Reuters) – Wall Street slumped on Friday as solid job growth and a drop in the unemployment rate last month gave the Federal Reserve more room to stick to jumbo rate hikes, while a revenue warning from Advanced Micro Devices (NASDAQ: ) hits chipmakers.

The Labor Department’s closely monitored employment report found that nonfarm payrolls jumped 263,000 jobs last month, after rising from 315,000 in August.

The report also showed that the unemployment rate fell to 3.5% in September, below expectations of 3.7%. Traders now see a 92% chance of a 75 basis point increase by the Fed, up from 83.4% before data.

The aggressive rise in borrowing costs has fueled fears of a slowdown in economic growth and a blow to corporate profits, but as the labor market remains tight, the Fed is likely to continue with its monetary tightening plan.

“The markets are concerned that the Fed will rely on information like this that is really a month old and that they will overshoot and destroy the economy,” said Kim Forrest, chief investment officer at Bokeh Capital Partners.

“Investors are not confident in a soft landing as the Fed has to go higher and higher to slow the economy.”

The Philadelphia Semiconductor SE index lost 4.2% and was about to record its largest single-day percentage drop in nearly a month as a revenue warning from Advanced Micro Devices Inc indicated the chip slump could be worse than expected.

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AMD fell 7.97% as third-quarter revenue estimates were about $1 billion lower than previously forecast.

Peers Qualcomm (NASDAQ:) Inc, Intel Corp (NASDAQ:), ON Semiconductors, Lam Research (NASDAQ:) and Nvidia (NASDAQ:) Corp lose between 2.65% and 4.88%.

“People who had hoped for a turnaround in the chips are starting to give up that hope,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.

The technology sector index fell by 3.1%, leading to declines in the 11 major sector indices.

At 10:02 AM ET, the S&P 500 fell 488.84 points or 1.63% to 29,438.10, the S&P 500 fell 80.05 points or 2.14% to 3,664.47 and fell 309.86 points or 2.80% to 10,763.45.

All three major Wall Street indices will continue to experience a three-week loss streak, heading for their biggest weekly gains in nearly a month.

With the benchmark rising to 3.8875%, the most price sensitive technology and growth stocks such as Alphabet (NASDAQ:) Inc, (NASDAQ:), Apple Inc (NASDAQ:), Microsoft Corp (NASDAQ:) fell between 2.25% and 3.92%.[US/]

The number of declining issues surpassed the avant-garde by a 7.75-to-1 ratio on the NYSE and a 4.70-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and 49 new lows, while the Nasdaq recorded 12 new highs and 148 new lows.



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