Major US indexes on Wall Street ended low in the red zone on Tuesday as the jobs data emphasized the view that the Federal Reserve may continue its hawkish policies which has fueled up interest rate worries.
The Dow was in the red zone for the first time since June and ended at its lowest level since 31st May. Nasdaq and S&P 500 followed a similar path, ending at their lowest points since June.
The recent economic data showed that the job openings in the US increased unexpectedly in August, increasing worries about a tight labor market just ahead of the release of the monthly job report.
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How investors are looking at the wall street ending low and job data?
Investors are keeping a close eye on the benchmark Treasury yields, which had 16-year high on Tuesday. Mel Casey, a senior portfolio manager at FBB capital partners, views it as a tough day for markets across the board.
He further viewed that the markets were having difficulty predicting the direction and the changes in interest rates in the future. The markets are still confused and have questions related to inflation.
Rick Meckler, partner at Cherry Lane Investments said that, “the scenario that most investors were assuming is the Fed would ultimately need to cut short-term rates, and would return to a favorable interest rate environment.”
But a few investors are also seeing a different scenario, they are of the view that because Wall Street ended low as the recent job data came, it has fueled up interest rate worries. This will also negatively affect the businesses and consumers.
Atlanta Fed President Raphael Bostic said there is no urgency for the Federal Reserve to raise its policy rate again, but it will likely take “a long time” before rate cuts are appropriate. However, Cleveland Fed President Loretta Mester said she is open to raising rates again, potentially at the bank’s next meeting.
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The Wall Street Overview
The Utilities sector (.SPLRCU) was the only one that had escaped falling in the S&P 500 index, the largest declines were seen in the consumer discretionary (.SPLRCD) and tech sector (.SPLRCT). Growth-based companies were the hardest hit of all due to the rising yields.
The Dow Jones Industrial Average fell by 1.29%, the Nasdaq went down by 1.87%; whereas the S&P 500 dropped by 1.37%. Moreover, the wall street’s “fear gauge”, the CBOE volatility index, hit its highest level since May 24.
Shares of the technology giants, Amazon and Microsoft saw a dip after Reuters reported that the British media regulator will move forward with an antitrust investigation. Investors are also looking forward to the 3rd quarter reporting from the US companies in the coming weeks.