Wall St slips as focus shifts to jobs data

By Amruta Khandekar and Shristi Achar A

(Reuters) – Wall Street’s main indexes fell on Tuesday as investors waited for a slew of data, including the crucial jobs report, to gauge whether the Federal Reserve will cut interest rates by early next year.

After a strong run of gains in November that sent the S&P 500 to its closing high for the year, U.S. equities pulled back in the previous session as longer-dated Treasury yields bounced off three-month lows.

A majority of traders believe the Fed may have reached the end of its tightening campaign, given that inflation is easing, and have nearly fully priced in the possibility that the central bank will keep rates unchanged next week.

They are also betting on lower interest rates next year, with 62% pricing in a rate cut of at least 25 basis points in March and 87.6% in May, according to the CME Group’s FedWatch tool.

However, market experts have pointed out that investors may have been too optimistic in pricing in early rate cuts and are now awaiting fresh economic data for further policy cues.

“We’re kind of in a wait-and-see mode as far as the jobs numbers go. With a lack of new catalysts, it’s hard for investors to stick around and not take profits,” said Art Hogan, chief market strategist at B Riley Wealth in New York.

Hogan said investors also need more evidence pointing to a soft landing for the economy – where the Fed manages to bring inflation lower, while avoiding a recession.

A Labor Department survey due at 10 a.m. ET is expected to show U.S. job openings fell to 9.3 million in October from about 9.55 million in September, signaling slowing labor demand. On Friday, the more comprehensive non-farm payrolls report for November will offer greater clarity on the state of the labor market.

All 11 major S&P 500 sectors traded in the red, with materials and real estate stocks leading declines.

At 9:35 a.m. ET, the Dow Jones Industrial Average was down 90.39 points, or 0.25%, at 36,114.05, the S&P 500 was down 13.46 points, or 0.29%, at 4,556.32, and the Nasdaq Composite was down 41.69 points, or 0.29%, at 14,143.81.

Among individual stocks, Take-Two Interactive Software fell 1.3% after a trailer of the latest installment of its best-selling “Grand Theft Auto” videogame franchise was released.

CVS Health rose 3.4% on forecasting 2024 revenue above Wall Street estimates, as the insurer expects to benefit from its expansion into health services.

Shares of U.S.-listed Chinese firms including PDD Holdings, JD.com and Baidu fell between 0.6% and 1.5% after ratings agency Moody’s cut its outlook on China’s government credit ratings to “negative” from “stable”.

Declining issues outnumbered advancers for a 2.31-to-1 ratio on the NYSE and a 2.00-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded 24 new highs and 20 new lows.

(Reporting by Amruta Khandekar and Shristi Achar A; Editing by Pooja Desai)