S&P 500 stumbles as signs of tight labor market add to Fed fears

By Yasin Ebrahim

Investing.com -- The S&P 500 stumbled Wednesday as investors continued to fret about aggressive Federal Reserve rate hikes after data reaffirmed that the labor market remains tight just days ahead of the monthly jobs report due Friday.

The S&P 500 fell 0.3%, the Dow Jones Industrial Average fell 0.3%, or 184 points, the Nasdaq Composite was down 0.1%.

Data showing job openings fell by less than expected January and private job gains for February topped economists’ estimates added further fuel to bets that the Fed will be forced to step up the pace of rate hikes at its March meeting.

The odds of a return to a 50-basis-point rate hike in the Fed’s March 21-22 decision climbed to 80% following the data from 71% a day earlier, when chairman Powell talked up the prospect of higher for longer rates.

The data comes ahead of the February nonfarm payrolls due Friday, which could still sway the Fed’s thinking on whether to revert to a higher pace of rate hikes.

Treasury yields continued to advance following a surge a day earlier, with the 2-year Treasury yield nearly hitting 5.1% on the day, the highest level since 2007.

Energy was the main drag on the market, falling more than 1% as oil prices fell amid concerns about the impact of Fed rate hikes on the economy and energy demand.

Valero Energy Corporation (NYSE:VLO), EQT Corporation (NYSE:EQT), and Coterra Energy Inc (NYSE:CTRA) were among the biggest decliners in energy on the day.

Tech remained above the flatline, led by a jump in semiconductor stocks, led by a more than 4% jump in Advanced Micro Devices (NASDAQ:AMD).  

On the earnings front, meanwhile, Stitch Fix (NASDAQ:SFIX) fell 4% after the styling company reported a wider quarterly loss after revenue fell short of analysts’ estimates.

Some analysts on Wall Street struggled to find reason for optimism on the stock and flagged several headwinds including dwindling customers, margin pressures and leadership uncertainty.

“They're bleeding customers, revenues are sharply negative (and worsening on a multi-year stack basis), gross margins are under heavy pressure (-410bps YoY) and there's uncertainty in the C-suite,” Wedbush said in a note.

Crowdstrike Holdings Inc (NASDAQ:CRWD) gained more than 2% after the cybersecurity firm reported better-than-expected quarterly results as strong performance in January helped ease the challenging macroeconomic backdrop.

“While the macro environment remains challenging, overachievement in the quarter seems largely attributable to a strong close in January along with increased traction down market,” Duetsche Bank said in a note.

In other news, Tesla (NASDAQ:TSLA) slipped 2% after the U.S. National Highway Traffic Safety Administration launched a probe into two complaints over steering wheels falling off the Tesla Model Y.