U.S. stocks dipped on Thursday morning after economic data showed private payrolls rose more than expected last month and weekly jobless claims fell to a three-month low, pointing to continued labor market pressures despite higher interest rates.
The S&P 500 (^GSPC) fell 0.7%, while the Dow Jones Industrial Average (^DJI) lost 250 points, or 0.8%. The tech-heavy Nasdaq Composite ( ^IXIC ) fell 0.9%.
The ADP National Employment Report showed that private employment rose by 235,000 jobs in December. Economists polled by Bloomberg had called for an increase of 150,000.
Elsewhere in the economic data, jobless claims also fell to 204,000, the lowest level since September, in the week ended Dec. 31, from a downwardly revised reading of 223,000 the previous week, the Labor Department said on Thursday.
The reports were the latest to show strong demand for workers, even as the Federal Reserve pressed ahead with aggressive monetary tightening to tame inflation. The ADP and weekly jobless claims data followed a separate measure on Wednesday that found job vacancies fell less than expected last month and remained high. The Labor Department’s monthly nonfarm payrolls survey, due out Friday morning, remains the most important read for Fed officials and investors trying to predict the next policy move.
“While we will get a better overall picture of the labor market tomorrow, private payrolls beating expectations and jobless claims coming in below are indications that the labor market remains resilient,” said the head of the global Morgan Stanley Investment Office Model Portfolio Construction Mike Lowengart in Note. “These come on the heels of major companies announcing significant job cuts, so there’s no doubt that market pressures are weighing on companies, but it remains to be seen when hiring will slow noticeably.”
Amazon ( AMZN ) CEO Andy Jassy said in a note late Wednesday that the company’s planned job cuts will now affect at least 18,000 employees, significantly more than previously indicated. Jassy’s note came after the Wall Street Journal reported the news. Shares were lower in early trading on Thursday.
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The figure marks the biggest workforce reduction by a tech company in months as more names in the sector shed workers to cut costs amid more challenging market conditions. Amazon lost an estimated $834 billion in market value in 2022.
Bed Bath & Beyond ( BBBY ) said in a statement released Thursday that it is facing bankruptcy as it grapples with ongoing financial struggles. Shares fell more than 22% near the open.
Shares of crypto-focused Silvergate Capital ( SI ) fell 38% at the open after The Wall Street Journal reported on Thursday that the bank was forced to sell assets at a significant loss to cover $8.1 billion in post-bankruptcy withdrawals of FTX. The fall comes after shares rose 27% on Wednesday.
In other crypto stock moves, shares of Coinbase ( COIN ) fell 10% after Cowen downgraded it to Market Perform from Outperform, citing a “fairly consistent decline” in trading volumes and the risk of possible regulatory action following the FTX collapse.
“There is little visibility for retail trade volumes to stabilize in 2023 following the further deterioration in December,” the firm said. “Potential SEC enforcement action raised after FTX with regulatory certainty unlikely until 2024.”
Shares of T-Mobile ( TMUS ) rose 1.8% after the mobile service provider reported fourth-quarter subscriber growth that slightly exceeded estimates. The company added 927,000 new phone customers in the period, compared with analysts’ calls for 921,000.
Johnson & Johnson’s ( JNJ ) Kenvue consumer health business on Wednesday filed to list as a separate company, marking the first major U.S. initial public offering filing of the new year.
Elsewhere, oil prices resumed their slide after falling nearly 10% in the past two days. West Texas Intermediate (WTI) crude futures, the US benchmark, fell to $72 a barrel.
Screens on the trading floor of the New York Stock Exchange (NYSE) show Federal Reserve Chairman Jerome Powell during a press conference December 14, 2022. REUTERS/Andrew Kelly
Scheduled speeches by Federal Reserve Chairs Raphael Bostick and James Bullard will also be closely watched on Thursday.
Stocks closed higher on Wednesday after a choppy session influenced by minutes read from the Federal Reserve’s December meeting and economic data that showed higher-than-expected job openings and a drop in manufacturing activity for a second straight month.
Minutes from the Fed on Wednesday showed officials were opposed to “unwarranted” easing of financial conditions, although they welcomed cooling inflation and the need to maintain a “restrictive policy stance” until data becomes more promising.
“The minutes from the December meeting show that FOMC members remain focused on current inflation and inflation risks, with the fear of overdoing monetary policy receiving very little attention,” Pantheon Macroeconomics chief economist Ian Shepherdson said in a note.
“Don’t expect them to soften their inflation line until it’s clear that a major shift in the data is taking place,” he added.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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