NEW YORK, Nov 3 (Reuters) – U.S. stocks closed lower for a fourth consecutive session on Thursday as economic data did little to shake expectations that the Federal Reserve would continue to raise interest rates for longer than expected .
Following the Federal Reserve’s statement on Wednesday, comments from Fed Chairman Jerome Powell that it was “very premature” to consider pausing its rate hikes dragged stocks lower as U.S. bond yields and the US dollar rose, a trend that extended through Thursday.
Thursday’s economic data showed the laboratory market which continues to remain strong, although a separate report showed service sector growth slowed in October, keeping the Fed on its aggressive course of raising interest rates.
“Years ago the job of the Fed was to pull the punch bowl out and that balance is always a very difficult transition. You want the economy to slow down to keep inflation from getting out of control, but you want enough earnings to support stock prices,” Rick said. Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.
“It’s as much about the rate of change as it is about the change, so when the rate of change starts to slow…it becomes almost positive even though in absolute terms we’re going to continue to see higher rates, and higher rates mean more competition for shares and lower multiples.”
The Dow Jones Industrial Average (.DJI) fell 146.51 points, or 0.46%, to 32,001.25, the S&P 500 (.SPX) fell 39.8 points, or 1.06%, to 3,719.89 and the Nasdaq Composite (.IXIC) fell 181.86 points, or 1.73%, to 10,342.94.
While traders are roughly distribute evenly between the likelihood of a 50bps and 75bps rate hike in December, the top fed funds rate is expected to rise to at least 5%, versus a prior view of a 4% range hike .50% to 4.75%.
Investors will be keeping a close eye on Friday’s nonfarm payrolls report as Fed rate hikes begin to have a noticeable impact on the slowing economy.
Rising yields have weighed on mega-cap growth companies like Apple Inc (AAPL.O)down 4.24%, and Alphabet Inc (GOOGL.O)which lost 4.07% and reduced technology (.SPLRCT) and communications department (.SPLRCL) sectors as the session’s worst performers.
Losses were curbed on the Dow thanks to gains from industrialists, including Boeing Co. (TO FORBID)which rose 6.34%, and a 2.20% rise from heavy equipment maker Caterpillar Inc. (CAT.N).
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With about 80% of S&P 500 companies reporting profits, the expected growth rate is 4.7%, according to Refinitiv data, up slightly from 4.5% in early October.
Volume on U.S. exchanges was 11.81 billion shares, compared to an average of 11.63 billion for the full session over the past 20 trading days.
Falling issues outnumbered rising ones on the NYSE by a ratio of 1.75 to 1; on the Nasdaq, a 1.50-to-1 ratio favored decliners.
The S&P 500 posted 6 new 52-week highs and 46 new lows; the Nasdaq Composite recorded 77 new highs and 291 new lows.
Reporting by Chuck Mikolajczak in New York Editing by Matthew Lewis
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