US: Stocks fall as strong data boosts odds of more Fed actions

WALL Street stocks dropped on Thursday (Jul 6) following strong US economic data that boosts the chances for more Federal Reserve interest rate hikes. Thursday’s reports included releases from payroll firm ADP estimating the US economy added 497,000 jobs last month, more than double the expected amount. Also, a survey by the Institute for Supply Management pointed to solid growth in the services sector in June, again suggestive of a growing economy. The ADP figures, in particular, were “clearly eye opening” and a “bit of a shock to markets”, said Interactive Brokers’ Steve Sosnick, noting hopes that the Fed’s earlier interest rate increases will bring down inflation. The Dow Jones Industrial Average finished at 33,922.26, down 1.1 per cent. The broad-based S&P 500 dropped 0.8 per cent to 4,411.59, while the tech-rich Nasdaq Composite Index also declined 0.8 per cent to 13,679.04. The yield on the 10-year US Treasury note, seen as a proxy for Fed expectations, pushed above four per cent as futures markets predict another rate increase at the Jul 26 meeting. Analysts have also noted that the market is primed for a pullback after a strong first half of 2023. Among individual companies, Meta Platforms slipped 0.8 per cent after it launched “Threads”, a rival to Twitter. More than 30 million people downloaded the new app within the first few hours of its launch, the company’s CEO Mark Zuckerberg said. Ford dropped 2.4 per cent as it reported a 10 per cent rise in US auto sales to 531,662. However, analysts noted that Ford suffered a fall in electric vehicle sales compared with the year-ago period, suggesting challenges in ramping up output of the newer vehicles. AFP