US stocks fell on Wednesday as Wall Street retreated from a sharp two-day rally that lifted major moving averages above last week’s 2022 lows.
The S&P 500 fell 1.4%, while the Dow Jones Industrial Average fell 340 points, or 1.1%. The tech-heavy Nasdaq Composite led the way, down 1.9%.
Wednesday’s moves come after the benchmark S&P 500 rose 5.7% over the past two days — its biggest consecutive gain in more than two years. of the Carson Group Ryan Detrick points out that sign the best start to a new quarter since the second quarter of 1938.
The Dow Jones Industrial Average is up 1,500 points since Monday, a rise that took the index back above its key 30,000 level and out of a bear market, now just 18% below its recent high as of Tuesday’s close. The tech-heavy Nasdaq Composite rose 5.6% over the same two-day period.
In Wednesday’s economic data, the ADP’s private employment report showed that the US economy added 208,000 jobs in September.
Shares of Twitter (TWTR) fell 2% after rising 22% on Tuesday after Tesla (TSLA) CEO Elon Musk appeared to agree to sell the social media platform at its originally proposed price of $54.20 per share to buy. The offer came days before it was due to be dropped as part of Twitter’s lawsuit.
Elsewhere, US Treasury yields rose after falling across the board, with the 10-year yield back above 3.7%. The US dollar index also rose after its fifth straight decline on Tuesday. The dollar has now “rounded” its post-FOMC rally and is back where it was on September 6th, according to data from Bespoke Investment Group.
On the oil front, OPEC+ gave the green light to its sharpest production cut since 2020 — by 2 million barrels a day — after US officials failed to contest the decision ahead of a meeting of the oil producers group. West Texas Intermediate (WTI) Crude Oil rose 1.1% to $87.74 a barrel.
While the start of a new month and quarter has given markets some respite from September’s vicious selling in both stocks and bonds, many strategists are skeptical that the rally can maintain momentum as officials are still looking for a way further policy tightening and what is expected to be a dismal earnings season are ahead.
“Optimism from early October is still seeping through financial markets, and hope is mounting that the Federal Reserve’s relentless rate hikes may be slowing and even reversing soon,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, in one Note.
“Investors are clinging to any evidence that might point in that direction, such as the US job stats falling sharply in September, but there’s still every chance that the rays of light they’re seeing will get through a new resolve should be overshadowed Policymakers should maintain the rate-hike stance until inflation is brought down significantly further.”
Labor and manufacturing data this week helped fuel renewed optimism for a political turning point this week. Figures from the Institute for Supply Management (ISM) on Monday showed that US manufacturing grew at the slowest pace in two and a half years. And the Labor Department said in its monthly Job Vacancy and Labor Turnover Survey (JOLTS) that job vacancies fell 1.1 million to 10.1 million on the last working day in August.
Jeffrey Roach, LPL’s chief financial economist, cautioned that the data is unlikely to dissuade policymakers from another sizeable hike in the Fed’s interest rates in November as “the labor market switched from ‘extremely tight’ to ‘very tight'”.
The all-important monthly jobs report from the Labor Department, due out Friday morning, will be the more critical economic release for investors. Economists expect nonfarm payrolls to have risen by 250,000 over the past month, according to consensus estimates from Bloomberg.
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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