(Bloomberg). US stocks fell as investors struggled to find evidence of strength in labor markets. This could allow the Federal Reserve to keep its rate hike path firm. The dollar gained while Treasury yields rose.
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The S&P 500 and the Nasdaq 100 came off session lows after S&P Global’s December US services purchasing managers’ index data added to signs that the economy is cooling. News that Russian President Vladimir Putin ordered a temporary cease-fire in Ukraine over Orthodox Christmas on Friday and Saturday hasn’t seemed to move markets yet.
US stocks started Thursday’s session lower after hiring numbers surpassed estimates in a private payrolls report and new claims for unemployment benefits unexpectedly fell last week. These data indicate that the labor market is resilient, which could result in higher wages and more aggressive Fed policy.
The Fed indicated that it can continue its fight against rising prices because of tight labor conditions. Officials remain concerned that financial conditions may become too loose to hinder economic growth, even though the Fed launched the most aggressive tightening campaign since decades.
“We always say don’t fight the Fed when there are easy monetary conditions. We have to follow that sage advice when there are tightening financial conditions,” Kristen Bitterly of Citigroup Global Markets Inc. said on Bloomberg Television. “All this data we are getting is telling us that they are going to continue on this tightening path.”
Atlanta Fed President Raphael Bostic also bruised sentiment on Thursday after he said the central bank still has “much work to do” to tame inflation. He is joining a chorus this week of Fed officials who are “hawkish”. Minneapolis Fed President Neel Kashkari said Wednesday he expects rates to rise as high as 5.4%, while Kansas City Fed’s Esther George said she favors a rise above 5%.
Swap rates tied to Fed decisions increased and now indicate a peak at the overnight effective rate close to 5.05% in 2023. For February’s next gathering, the Fed has a target range of 4.25%- 4.5%. There are approximately 38 basis points for hikes.
Continue reading: Treasury yields surge as strong jobs data boost Fed hike bets
In company news, Bed Bath & Beyond Inc. sank after warning it might not be able to continue as a going concern. Silvergate Capital Corp. plunged after the bank said the crypto industry’s meltdown triggered a run on deposits. After briefly rising following news that Amazon.com Inc. was laying off more employees than 18,000, Amazon.com Inc. dropped. This is the largest reduction in Amazon.com’s history.
This week’s key events:
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Eurozone retail sales, CPI and consumer confidence, Friday
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Friday, Germany Factory Orders
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Friday: US nonfarm payrolls, Factory Orders, Durable Goods
Here are some of the major moves on markets:
Stocks
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The S&P 500 fell 1% as of 10:31 a.m. New York time
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The Nasdaq 100 declined 1.1%
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The Dow Jones Industrial Average dropped 0.9%
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The Stoxx Europe 600 was unchanged
Currencies
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The Bloomberg Dollar Spot Index rose 0.6%
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The euro fell 0.7%, to $1.0527
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The British pound fell 1.3%, to $1.1900
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The Japanese yen fell by 1% to 133.94 dollars
Cryptocurrencies
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Bitcoin increased 0.1% to $16,843.79
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Ether dropped 0.2% to $1.249.69
Bonds
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The yield on 10-year Treasuries rose seven basis points to 3.766%
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Germany’s 10-year yield advanced six basis points to 2.33%
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Britain’s 10-year yield advanced seven basis points to 3.56%
Commodities
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West Texas Intermediate crude oil rose 0.4%, to $73.15/barrel
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Gold futures dropped 1.2% to $1835.90 an ounce
Bloomberg Automation assisted in the production of this story.
–With the help of Isabelle Lee and Namitha Jagdeesh
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