The S&P and the Nasdaq are falling as weak private payroll data fuels recession fears

(Reuters) – The Standard & Poor’s 500 and Nasdaq fell on Wednesday as weaker-than-expected private payroll data for March deepened concerns that the Federal Reserve’s rapid interest rate hike could tip the US economy into recession.

The US National Employment Report (ADP) showed that US private sector employment rose by 145,000 jobs last month, compared to economists’ expectations for an increase of 200,000 jobs, adding to recent signs of a slowing economy.

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 have risen to 60.8%, while odds of a 25 basis point rate hike have fallen to 39.2%, according to CME Group’s Fedwatch tool.

Major technology and growth stocks such as Meta Platforms Inc (META.O), Tesla Inc (TSLA.O) and Amazon.com Inc (AMZN.O) fell between 0.3% and 1.4% in early trade.

Nvidia Corp. (NVDA.O) topped the S&P 500, down 2.2%, 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.

Defensive stocks such as health care (.SPXHC), utilities (.SPLRCU) and consumer goods (.SPLRCS) were in the green among the major S&P 500 sectors.

Keeping Dow Jones afloat was a 3.2% gain at Johnson & Johnson (JNJ.N) after the company’s $8.9 billion bid to settle talc-related lawsuits won the support of thousands of claimants, easing the burden on its plans to list the consumer health unit. Kinfu.

All eyes now turn to March Nonfarm Payrolls, the most comprehensive employment report, due out on Friday for more clues about the state of the labor market.

“The Street understands that with the ADP payrolls slowing … and the possibility that we will get a drop in the payroll numbers on Friday, the economy is already slowing and the Fed will only need to raise the rate again, if at all,” Sam said. Stovall, chief investment strategist at CFRA Research in New York.

“But at the same time, I think investors are watching very closely to make sure we don’t fall into a deep recession.”

A report on non-manufacturing activity in March from the Institute for Supply Management is expected later on Wednesday.

At 9:38 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 57.17 points, or 0.17%, at 33,459.55, the S&P 500 (.SPX) was down 6.16 points, or 0.15%, at 4,094.44, and the Nasdaq . The Composite Index (.IXIC) fell 61.98 points, or 0.51%, to 12,064.35.

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

FedEx Corp (FDX.N) rose 3.6% 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 2.10 to 1 on the NYSE and 2.02 to 1 on the Nasdaq.

The S&P posted four new highs in 52 weeks and one new low, while the Nasdaq recorded 17 new highs and 85 new lows.

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

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