Stock market today: Wall Street drops after jobs data raises threat of high rates

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Stocks are falling Thursday after reports suggested the U.S. job market remains much more resilient than expected.

The S&P 500 was 1% lower in early trading. The Dow Jones Industrial Average was down 354 points, or 1%, at 33,934, as of 9:43 a.m. Eastern time, and the Nasdaq composite was 1.1% lower.

The ADP report can be volatile and "isn't necessarily a good predictor of the monthly jobs report" that is more comprehensive and due from the U.S. government on Friday, said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office. Thursday's pullback for Wall Street follows a big rally through the first half of the year built amid relief that the economy has remained surprisingly resilient despite much higher interest rates.

But inflation has also slowed since peaking last summer. The hope on Wall Street had been that just one or two more rate hikes would be on the way this year before the Fed could begin cutting rates in the first part of next year. The two-year Treasury yield, which moves more on expectations for the Fed, leaped to 5.06% from 4.95%. It's back to where it was in early March, before the failures of Silicon Valley Bank and other banks rattled confidence across financial markets.

 

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