In the latest example of how good news for the economy can be bad for Wall Street, the Dow Jones fell nearly 600 points Thursday after strong economic reports raised the possibility that interest rates will remain painfully high.
The weakness was widespread and overshadowed another report on blowout profits from market heavyweight Nvidia.
The Dow Jones Industrial Average slipped 626 points, or 1.6%, to 39,044, and the Nasdaq was down 0.7%.
The S&P 500 was down 0.9% in afternoon trading, moving further away from its record high set earlier this week.
Stocks have suffered under the weight of rising yields in the bond market.
Treasury yields added pressure following stronger-than-expected reports on the U.S. economy, which forced traders to rethink their bets on when the Federal Reserve might offer relief to financial markets by cutting bond rates. interest.
A preliminary report suggests that growth in U.S. business activity is reaching its fastest pace in more than two years.
S&P Global said in its report that growth has improved for companies not only in the services sector but also in the struggling manufacturing sector.
A separate report shows that the US labor market remains strong despite high interest rates.
Fewer workers filed for unemployment benefits last week than economists expected, indicating that layoffs remain relatively low.
Treasury yields had remained mostly flat following the release of the unemployment report, but rose immediately after the release of the economic activity report, which also suggested sales prices remained stubbornly high.
With upward pressure on inflation now coming from both the manufacturing and services sectors, this suggests that “the last mile to the Fed’s 2% target still appears elusive,” according to Chris Williamson, chief business economist at S&P Global Market Intelligence.
New York Post
