Wall Street ended the day on a calm note as concerns about an overheating US job market kept bond market pressure high. The S&P experienced a slight decline of 0.1%, or 5.56 points, closing at 4,258.19. This came just a day before the release of a highly anticipated job market report that could influence the Federal Reserve’s stance on interest rates, according to the AP. The Dow also saw a minor decrease of less than 0.1%, or 9.98 points, to 33,119.57. Likewise, the Nasdaq slipped by 0.1%, or 16.18 points, to 13,219.83.
Stocks have been struggling since the summer due to surging Treasury yields in the bond market. These yields have weakened stock prices and constrained corporate profits. Traders are now accepting a new norm where the Federal Reserve will likely maintain its main interest rate at a high level for an extended period in order to combat high inflation. On Thursday, Treasury yields oscillated after a report revealed that fewer US workers filed for unemployment benefits than expected. This indicates that fewer workers are being laid off, normally a positive sign. However, concerns have now shifted to the possibility that a strong job market could trigger inflationary pressures. As a result, the Fed has increased its main interest rate to the highest level since 2001 as a deliberate move to slow down the job market.
Rubeela Farooqi, chief US economist at High Frequency Economics, stated, “Even as the Fed has taken aggressive action to soften labor market conditions, businesses continue to hold on to workers.” A more comprehensive report on the overall US job market is scheduled for release on Friday, with economists predicting a slowdown in hiring to 163,000 jobs added in September, compared to 187,000 in August. After an initial surge prompted by the jobless claims report, the yield on the 10-year Treasury later receded. As of now, it stands at 4.71%, down from 4.73% on Wednesday. Earlier this week, it reached its highest level since 2007. (Read more stock market stories.)
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