Stocks Shift Little Ahead of Jobs Report

An employment picture that's too bright could add to inflation fears
By Newser Editors and Wire Services
Posted Oct 5, 2023 3:37 PM CDT
Stocks Shift Little Ahead of Jobs Report
A hiring sign is displayed at a restaurant in Palatine, Ill., Wednesday, Sept. 13, 2023. On Thursday, the Labor Department reports on the number of people who applied for unemployment benefits last week.   (AP Photo/Nam Y. Huh)

Wall Street drifted to a quiet close Thursday as pressure from the bond market remained high due to worries about a too-hot US job market. The S&P slipped 5.56, or 0.1%, to 4,258.19, a day before a highly anticipated report on the job market that could sway the Federal Reserve's view on interest rates, the AP reports. The Dow edged down by 9.98 points, or less than 0.1%, to 33,119.57. The Nasdaq dipped 16.18, or 0.1%, to 13,219.83.

Stocks have struggled since the summer under the weight of soaring Treasury yields in the bond market, which undercut stock prices and crimp corporate profits. Yields have leaped as traders acquiesce to a new normal where the Federal Reserve is likely to keep its main interest rate at a high level for a long time, as it tries to extinguish high inflation. Treasury yields wavered up and down Thursday after a report showed fewer US workers applied for unemployment benefits last week than economists expected. That's a sign fewer workers are getting laid off than expected, which is normally a good sign. But the worry now is that the strong job market could put upward pressure on inflation. That's why the Fed has raised its main interest rate to the highest level since 2001, to intentionally slow the job market.

"Even as the Fed has taken aggressive action to soften labor market conditions, businesses continue to hold on to workers," said Rubeela Farooqi, chief US economist at High Frequency Economics. A more comprehensive report on the overall US job market is due Friday, and economists expect it to show hiring slowed to a pace of 163,000 jobs added in September from 187,000 in August. After initially jumping on the jobless claims report, the yield on the 10-year Treasury later pulled back. The 10-year yield was at 4.71%, down from 4.73% late Wednesday. Earlier this week, it hit its highest level since 2007.

(More stock market stories.)

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