Stocks drop as investors ponder Fed, awaits jobs report

US stocks sank on Thursday after a dramatic case A two-day walk who started the quarter leaky.

The S&P 500 and Dow Jones industrial indexes each fell 0.8%, while the high-tech Nasdaq Composite was down 0.7%. Meanwhile, in the bond market, Treasury yields are up, with benchmark 10-year notes exceeding 3.77% and a rate-sensitive two-year yield of 4.17%.

Investors weighed a batch of hawkish comments from Federal Reserve officials Thursday morning. Minneapolis Federal Reserve Bank of Minneapolis President Neil Kashkari acknowledged that the risk of overshooting was present, as much of the policy tightening still needed to work its way through the economy. He emphasized that, however, he and his colleagues were “completely far” from lowering inflation.

Echoing those sentiments, Loretta Meester, president of the Federal Reserve Bank of Cleveland, said the US was going through an “unacceptably high” inflation environment.

Minneapolis Federal Reserve Chairman Neil Kashkari speaks during an interview at Reuters in New York on February 17, 2016. REUTERS/Brendan McDermid

Minneapolis Federal Reserve Chairman Neil Kashkari speaks during an interview at Reuters in New York on February 17, 2016. REUTERS/Brendan McDermid

On the commodities front, US crude oil futures maintained gains of more than 10% this week after the approval of OPEC+ on Wednesday. Biggest production cut since 2020 – 2 million barrels a day – after US officials tried and failed to lobby against the move.

“These high oil prices definitely prevent gasoline prices from continuing their seasonal lows through the winter,” Andrew Lipow, president of Lipow Oil Associates, told Yahoo Finance Live on Wednesday. “The consumer of the gas pump will already see the effect within the next two weeks.”

New data from the Labor Department showed a jump in the number of Americans filing for unemployment insurance for the first time last week. Unemployment Complaints Rates It rose sharply to 219,000 for the week ending October 1 After falling to 193,000, the lowest level since April in the previous week. Economists called 203,000 claims, according to consensus estimates compiled by Bloomberg.

Other recent economic data reflecting a larger-than-expected drop in jobs and a sharp slowdown in manufacturing activity has fueled optimism that the Federal Reserve may focus on plans to tighten policy sooner than expected, but many on Wall Street remain skeptical that the data Moderate enough to persuade officials to scale back the price increases.

NEW YORK, USA - OCTOBER 5: Traders work at the New York Stock Exchange on October 5, 2022 in New York City.  The US national debt exceeded $31 trillion for the first time amid rising interest rates to quell record high inflation, and growing economic uncertainty, according to Treasury data.  (Photo by Lokman Vural Elibol/Anadolu Agency via Getty Images)

NEW YORK, USA – OCTOBER 5: Traders work at the New York Stock Exchange on October 5, 2022 in New York City. (Photo by Lokman Vural Elibol/Anadolu Agency via Getty Images)

On Tuesday, investors cheered the Labor Department’s Survey of Job Vacancies and Employment Turnover (JOLTS), which showed job openings fell 1.1 million to 10.1 million on the last working day of August. However, the ADP التوظيف Employment Report The US economy added 208,000 jobs in September, more than expected, and a continuation of the upward trend of labor market data.

“Before this Friday’s non-farm payroll (NFP) and the CPI next Wednesday, the market was oscillating between the ‘hawkish Fed’ and ‘pivotal Fed’ narratives,” JPMorgan analysts said in a note Thursday. That ADP jobs read, “proves that the economy remains strong and thus dims hope of a near-term pivot from the Fed”.

The Labor Department’s September jobs report due at 8:30 AM ET on Friday will prove to be the most important release for investors. Economists expect nonfarm payrolls to increase by 260,000 last month, according to Bloomberg’s latest estimates.

“Stock bulls will need to print around 100,000 to see the market alter the Fed’s outlook,” JPMorgan noted.

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed

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