S&P 500 ends lower as jobs data reignites fears of rate hike

A trader works on the floor of the New York Stock Exchange (NYSE) in Manhattan, New York, U.S. August 3, 2022. REUTERS/Andrew Kelly

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  • Non-farm payrolls beat expectations in July
  • Lyft surges after announcing record revenue
  • Closing of indices: S&P 500 -0.16%, Nasdaq -0.50%, Dow +0.23%

Aug 5 (Reuters) – The S&P 500 ended lower on Friday, weighed down by Tesla and other tech-related stocks after a strong jobs report torpedoed recent optimism that the Federal Reserve might give up its aggressive campaign to reign in high inflation for decades.

Data showed U.S. employers hired far more workers than expected in July, the 19th consecutive month of payroll expansion, as the unemployment rate fell to a pre-pandemic low of 3.5%. Read more

The report added to recent data painting an optimistic picture of the world’s largest economy after contracting in the first half of the year. That deflated investors’ expectations that the Fed might abandon its series of rate hikes aimed at cooling the economy.

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“It’s all about the Fed. A very strong jobs report like the one we pressured the Fed to tighten for longer,” said Adam Sarhan, managing director of 50 Park Investments. “The market is afraid the Fed will overshoot again. If they tighten too tightly for too long, it will cause a hard landing, a deep recession.”

Tesla (TSLA.O) fell 6.6% and weighed heavily on the S&P 500 and Nasdaq. Meta Platforms (META.O), owner of Facebook, lost 2% and Amazon (AMZN.O) fell 1.2%, also lowering the index.

US Treasury yields climbed as the likelihood of a 75 basis point interest rate hike in September increased. That helped bank stocks, with JPMorgan (JPM.N) up 3%, and helped the Dow Jones Industrial Average stay in positive territory.

The focus is now on inflation data due next week, with annual US consumer prices expected to jump 8.7% in July after rising 9.1% in June.

This week, several policymakers stuck to an aggressive policy-tightening stance until they saw strong and lasting evidence that inflation was trending toward the Fed’s 2% target.

Soaring inflation, war in Ukraine, energy crisis in Europe and COVID-19 outbreaks in China have rattled investors this year.

A largely upbeat second-quarter earnings season helped the S&P 500 rebound about 13% from its mid-June lows after a tough first-half performance.

The S&P 500 fell 0.16% to end the session at 4,145.19 points.

The Nasdaq fell 0.50% to 12,657.56 points, while the Dow Jones Industrial Average rose 0.23% to 32,803.47 points.

For the week, the S&P 500 rose 0.4%, the Dow Jones fell 0.1% and the Nasdaq added 2.2%.

Lyft Inc (LYFT.O) jumped nearly 17% after the ride-sharing company forecast adjusted operating profit of $1 billion for 2024 after posting record quarterly profits. Read more

Advancing issues outnumbered declining ones in the S&P 500 (.AD.SPX) by a ratio of 1.3 to 1.

The S&P 500 posted four new highs and 30 new lows; the Nasdaq recorded 60 new highs and 38 new lows.

Volume on U.S. exchanges was relatively light, with 10.6 billion shares traded, compared to an average of 10.8 billion shares over the previous 20 sessions.

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Reporting by Devik Jain, Aniruddha Ghosh and Medha Singh in Bengaluru, and Noel Randewich in Oakland, California; Editing by Anil D’Silva, Aditya Soni and Cynthia Osterman

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