Stocks close lower for fourth day, Nasdaq sheds 1.7% as October jobs report looms

Shares fell on Thursday, down for a fourth consecutive session. The fall came a day after the Federal Reserve announced another three-quarter point interest rate hike and signaled that a pivot or rate cut would not happen any time soon.

The Dow Jones Industrial Average slipped 146.51 points, or 0.46%, to close at 32,001.25. The S&P 500 fell 1.06% to end at 3,719.89, while the Nasdaq Composite fell 1.73% to 10,342.94.

Yields soared as traders digested the latest rate decision, putting pressure on stocks. The yield on the 2-year Treasury note hit its highest level since July 2007, while the benchmark 10-year Treasury yield jumped 9 basis points to around 4.15%.

“The post-Fed hangover continues to keep pressure on US equities as the impact of the first round of hikes finally kicks in,” said Ed Moya, senior market analyst at Oanda. “Stocks won’t have a painful death here, but they will soften until markets price in a little more hawkishness from the Fed.”

Traders had anticipated the central bank’s 0.75 percentage point rate hike and initially interpreted the Fed’s statement as dovish, suggesting smaller hikes ahead.

That initially drove stocks higher on Wednesday, but those gains reversed when Fed Chairman Jerome Powell said it was “premature” to discuss a pause in rate hikes and that the so-called “terminal rate”, or the level at which rates peak, would likely be higher than the Fed previously stated.

“We still have some way to go and the data received since our last meeting suggests that the ultimate level of interest rates will be higher than expected,” he said.

Many expect the market to continue to swing until it is clear that inflation has cooled and the Fed will stop climbing.

Next October jobs report

Investors’ attention also turned on Thursday to October’s nonfarm payrolls, which are due for release on Friday. High job numbers and low unemployment, while good for the economy, could signal more work ahead for the Fed.

Cracks are starting to appear in the resilient economy, but the Fed needs to see more “strain” to support a pivot, said Adam Sarhan, CEO of 50 Park Investments.

“Unemployment has to go up for inflation to go down,” he said. “It’s just reality – boots on the ground. People are going to stop buying and consuming so many goods and services when they don’t have a job.”

Another clue to inflation and the economy will come from next week’s Consumer Price Index report.

Elsewhere, the corporate earnings season continued, with Qualcomm, Roku and Fortinet all due to disappointing quarterly results and forward-looking guidance. KelloggShares of fell more than 8% despite a strong quarter and improved guidance.

For the week, all major averages are on pace with losses, with the Dow and S&P down 2.62% and 4.64%, respectively. The Nasdaq lost 6.84%, putting it on pace for its worst weekly performance since January 2022.

As of Thursday’s close, the Dow is on track to snap a four-week winning streak, while the S&P and Nasdaq look set to break a two-week winning streak.

Read the coverage of the mercado de hoy en español here.

Fix: A previous version misstated drops for Wednesday’s session.

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