The main US stock indices operate with a slight drop today, Tuesday, sparked by labor market data that intensified concerns about a possible economic slowdown. Additionally, profit-taking in some of Wall Street’s most popular stocks is fueling losses.
The indexes fell after the release of a Labor Department report that revealed a reduction in job openings to 8.05 million in April, lower than the expectation of 8.35 million. This data precedes the publication of non-farm payrolls figures for May, scheduled for Friday.
The U.S. Department of Labor’s Bureau of Labor Statistics reported that job openings, an important measure of labor demand, fell by 296,000 to 8.059 million at the end of April. This is the lowest level since February 2021, according to the Job Openings and Labor Turnover Survey (JOLTS).
Rubeela Farooqi, chief US economist at High Frequency Economics, commented: “The drop in job offers suggests a continued normalization between labor supply and demand. From a policy perspective, the Fed’s challenge will be to keep rates at a level that not only helps control inflation but also prevents a significant weakening of the labor market in the future.”
This report adds to a series of recent data that has increased concerns about a slowdown in the world’s largest economy. As a result, markets now anticipate that the US Federal Reserve could initiate interest rate cuts sooner than expected.
Treasury yields fell after the release of the jobs report. Currently, expectations for a rate cut in September are around 65%, compared to less than 50% last week, according to CME’s FedWatch tool.
Ronald Temple, chief market strategist at Lazard, commented: “Evidence is mounting that the Fed should start easing. Fewer workers are quitting each month, clearly indicating fewer opportunities to earn higher wages by changing jobs.”
Despite the change in expectations about rate cuts, indices remained in the red. Some attributed this to profit taking in large-cap technology and chip stocks, which have been the main drivers of Wall Street’s recent rallies.
