December 11, 2023

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The Standard & Poor’s and the Nasdaq are falling as recession fears mount on the back of weak economic data

  • The US service sector slowed in March. Inflation cools
  • Special payrolls for the month of March miss estimates
  • FedEx Reaches Consolidation of Operating Divisions
  • Indices are mixed: Dow Jones up 0.24%, S&P 0.33%, Nasdaq down 1.20%

(Reuters) – The Standard & Poor’s 500 and Nasdaq fell on Wednesday as a series of weak economic data deepened fears that the Federal Reserve’s rapid interest rate hike could push the US economy into recession.

Nvidia Corp. (NVDA.O) topped the S&P 500, down 2.9%, after Alphabet Inc (GOOGL.O) said the supercomputers it uses to train its AI models were faster and more power-efficient. from similar systems. From the chip maker.

Major technology and growth stocks such as Meta Platforms Inc (META.O), Tesla Inc (TSLA.O) and Inc (AMZN.O) fell between 1.5% and 4.0%.

On the data front, the ADP National Employment Report showed that US private employers hired far fewer than expected in March, adding to signs of a slowing labor market, after weak job openings data on Tuesday.

Moreover, the Institute for Supply Management survey showed that the services sector slowed more than expected last month due to cooling demand, while a measure of prices paid by service companies fell to the lowest level in nearly three years.

Earlier this week, data showed falling factory orders and weak manufacturing activity.

The focus will now be on the monthly non-farm payrolls, the more comprehensive employment report, due on Friday for more clues about the state of the labor market.

“If we paint a broader picture of what’s happening in the economy right now, we’re looking at weakening employment data, inflation which is easing but still stubbornly high,” said Brian Klimke, chief investment officer at Cetera Investment Management.

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“So it looks like we’re heading into a recession.”

As concerns mount about the deteriorating economic outlook in the wake of the recent turmoil in the banking sector, market expectations have shifted in favor of the US central bank which is pressing the brakes to raise interest rates.

Traders’ bets on a pause by the Fed in May stood at 60.5%, while odds of a 25 basis point rate hike were at 39.5%, according to CME Group’s Fedwatch tool.

Defensive stocks such as consumer goods (.SPLRCS) were in the green among major S&P 500 sectors, with health care (.SPXHC) and utilities (.SPLRCU) hitting their highest levels in nearly two months.

Keeping the Dow Jones afloat, Johnson & Johnson (JNJ.N) gained 3.3% after an $8.9 billion bid to settle talc-related lawsuits garnered the support of thousands of claimants, easing the burden on its plans to list consumer health unit Kenvue. .

At 11:39 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 80.99 points, or 0.24%, at 33,483.37, the S&P 500 (.SPX) was down 13.72 points, or 0.33%, at 4,086.88, and the Nasdaq . The Composite (.IXIC) fell to 11981.16 points, or 1.20%.

The benchmark S&P 500 and tech-heavy Nasdaq are now on track for their first weekly decline in four in the holiday-shortened week.

FedEx Corp (FDX.N) rose 1.2% as the leading shipping company said it would consolidate its operational divisions into a single organization while ramping up efforts to reduce costs and increase efficiency.

Declining issues outnumbered advancers by 2.22 to 1 on the New York Stock Exchange and 2.36 to 1 on the Nasdaq.

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The S&P recorded eight new highs in 52 weeks and two new lows, while the Nasdaq recorded 23 new highs and 185 new lows.

Additional reporting by Anika Biswas and Amruta Khandekar in Bengaluru; Editing by Nivedita Bhattacharjee and Shonak Dasgupta

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