Wall St suppresses jobs data ahead of new Powell testimony

  • Tesla slips as US regulator opens probe into Model Y cars
  • Occidental rises as Buffett’s Berkshire raises stake to 22.2%
  • Private payrolls stronger than expected in February
  • Indices: Dow down 0.02%, S&P down 0.04%, Nasdaq up 0.05%

March 8 (Reuters) – US stock indices struggled to find direction on Wednesday as investors worried about a possible recession, a day after comments from Federal Reserve Chairman Jerome Powell fueled bets on sharper rate hikes.

Ahead of Friday’s pivotal report on nonfarm payrolls, data showed US private payrolls rose more than expected in February, pointing to a continued strong labor market.

Powell told U.S. lawmakers on Tuesday that the Fed would likely have to raise interest rates more than expected to contain inflation, sending major U.S. stock indices down more than 1%, with the benchmark S&P 500 (.SPX) taking the biggest percentage drop. records in two weeks.

Traders sharply upped their bets that the US Federal Reserve will raise rates by 50 basis points later this month, pricing in the likelihood of such a move from money market futures at nearly 70%.

Powell will testify again before the House Financial Services Committee at 10 a.m. ET.

A closely watched portion of the US Treasury yield curve saw its deepest inversion in more than 40 years on Tuesday. Such an inversion is seen as a reliable recession indicator.

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“The yield on the 2-year rate really shows that the Treasury curve is serious about where interest rates are headed, while the 10-year is really trying to get behind that hard landing story,” said Art Hogan, chief market strategist at B Riley Wealth.

“Unless we get some data over the course of the next two weeks, we really don’t know which way to land. Unfortunately, the most important piece of data isn’t coming until Friday, which is why we have a market that’s squirming a bit.”

BlackRock’s Chief Investment Officer of Global Fixed Income, Rick Rieder, said the Fed could raise rates to 6% and keep them there for a longer period of time to fight inflation. Traders are currently seeing Fed Funds rates peak at 5.66% by September.

Data from the Labor Department at 10 a.m. ET likely indicates that the number of job openings in the US increased to 10.5 million in January, following an unexpected increase to 11 million the previous month.

At 9:38 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 7.11 points, or 0.02%, to 32,849.35, the S&P 500 (.SPX) was down 1.51 points, or 0.04%, to 3,984.86 and the Nasdaq Composite (.IXIC) rose 5.46 points or 0.05% to 11,535.80.

Tesla Inc (TSLA.O) fell 2.6% after the US auto safety regulator said it is opening a preliminary investigation into 120,000 Model Y 2023 vehicles following reports of steering wheels falling off while driving.

Occidental Petroleum Corp (OXY.N) gained 3.4% after Warren Buffett’s Berkshire Hathaway Inc (BRKa.N) increased its stake in the oil company to about 22.2%.

Falling issues outnumbered progress for a 1.11-to-1 ratio on the NYSE and 1.38-to-1 ratio on the Nasdaq.

The S&P index recorded no new highs in 52 weeks and eight new lows, while the Nasdaq recorded 11 new highs and 57 new lows.

Reporting by Sruthi Shankar and Bansari Mayur Kamdar in Bengaluru, additional reporting by Amruta Khandekar Editing by Vinay Dwivedi

Our Standards: The Thomson Reuters Principles of Trust.





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