Stocks extended earlier losses in Thursday morning trading as traders anticipated more hawkish moves from the Federal Reserve.
The Dow Jones Industrial Average was down 448 points, or 1.4%. It would be the Dow’s largest one-day decline since March 22. The S&P 500 declined 1.2%, while the Nasdaq Composite slid 1.3%. The S&P and Nasdaq were on track for their worst day since April 25. The last time all three fell more than 1% on the same day was May 2.
Traders were reacting to recent data, most notably scorching-hot ADP private-sector job growth. Oanda analyst Edward Moya writes that the numbers increase the odds the Federal Reserve delivers more interest-rate increases beyond its July meeting.
“The data-dependent Fed will look at the labor market and that should support the case for much more tightening,” he writes.
Traders put just 3.6% odds that the headline interest rate will hold steady through the next two Federal Open Market Committee meetings, according to the CME FedWatch Tool. Odds that the federal funds rate is 25 basis points higher after the July and September meetings were 67.9%. Odds it’s 50 basis points higher jumped to 28.5%, up from 18.1% on Wednesday.
Treasury yields popped following the report, with the 10-year yield hitting 4.061% and the 2-year yield surging to 5.078%.
Source: https://www.barrons.com/livecoverage/stock-market-today-070623/card/why-the-stock-market-is-falling-today-eBSqezmnSwrhcriox1y3?siteid=yhoof2&yptr=yahoo