Stocks fell Thursday after economic data showed a strong labor market and faster economic growth than previously thought.
The S&P 500 fell 1.7%. The Dow Jones Industrial Average fell 1.3% and the tech-centric Nasdaq Composite fell 2.4%. The US market rose on Wednesday on signs of a recovery in consumer confidence, but on Thursday it was on a downward trajectory for the third consecutive week.
Data suggesting consumer price growth is slowing and data suggesting the economy is resilient are causing intermittent gains. Complicating matters is that a strong economy could keep inflation high and the Fed raising interest rates more than many investors would like.
“Inflation will recede at some point next year if the central bank pauses,” said Susannah Streeter, senior investment and market analyst at British brokerage Hargreaves Lansdowne..
Until then, “that merry-go-round will be spinning,” she added.
Weekly data released Thursday showed 216,000 people filed their first claims for unemployment benefits last week, an increase of 2,000 from the previous week. Claims, a barometer of job cuts, have hovered around that level since May, suggesting continued labor market strength and the Fed may continue to tighten monetary policy. .
Meanwhile, a third estimate of economic growth last quarter suggested that output expanded at an annual pace of 3.2%. That’s a faster pace than his previous estimate of 2.9%.
Government bonds fell in price after the data, capping previous gains. The 10-year US Treasury bond yielded 3.677%, down from 3.684% on Wednesday but up from Thursday’s low.
Yields move in the opposite direction of bond prices. The 10-year yield is up from about 1.5% at the start of the year on Fed rate hikes, but down from his October high of over 4.2%.
The dollar has offset previous losses as the WSJ Dollar Index neared flat.
The world market was mixed. Car company losses weighed on the Stox Europe 600, which fell 0.1% despite gains in oil and gas stocks.
Hong Kong’s Hang Seng rose 2.7%, led by tech stocks. China’s securities regulator said late Wednesday that it supports overseas listings by tech companies as part of a broader statement on efforts to deepen capital markets.
Crude oil prices rose on signs of shrinking US inventories and falling Russian exports. Global benchmark Brent crude futures rose 0.5% to $82.98 a barrel.
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