Wall Street falls as the Fed’s hawkish rhetoric takes its toll

(Reuters) – Wall Street’s major indexes closed slightly lower on Thursday in a choppy session as hawkish comments from a US Federal Reserve official and data showing the labor market remained tight had some investors worried about larger interest rate hikes.

St. Louis Fed President James Bullard said the central bank needs to continue raising interest rates since its tightening so far has “had only limited effects on observed inflation.”

Stocks have fallen in recent days after a strong month-long rally driven by weaker-than-expected inflation reports that raised hopes that the Federal Reserve will limit its rate hikes.

“The Fed is still talking about interest rates in general,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “There may be some disagreement about the pace. But interest rates are not going down anytime soon.”

Stocks cut losses late in the session but major indices still closed in negative territory.

Dow Jones Industrial Average (.DJI) The index fell 7.51 points, or 0.02%, to 33,546.32, the Standard & Poor’s 500. (.SPX) It lost 12.23 points, or 0.31%, to 3,946.56 points, the Nasdaq Composite. (nineteenth) It fell 38.70 points, or 0.35%, to 11,144.96 points.

Data showed that the number of Americans filing new applications for unemployment benefits fell last week, indicating the labor market remains tight. Wednesday’s report detailed strong retail sales growth last month, suggesting that the economy has outgrown interest rate hikes.

Bets of traders on a 75 basis point hike at the next Fed meeting rose to 19% from about 15% a day earlier, according to CME Group’s FedWatch tool. Most investors still expect a 50 basis point increase.

Cisco systems (CSCO.O) Shares rose 5% after the company raised full-year revenue and profit forecasts while easing supply chain hurdles. The stock helped the S&P 500 IT sector (.SPLRCT) It posted a gain of 0.2%.

Most sectors of the S&P 500 closed lower, however, with utilities (.SPLRCU) Shedding 1.8%, consumer estimate (.SPLRCD) by 1.3%.

In company news, shares of Macy’s (MN) rose 15% after the supermarket chain raised its annual profit forecast thanks to resilient demand for high-end clothing and beauty products.

Low issues outnumbered high issues on the NYSE by a ratio of 2.06 to 1; On the Nasdaq, the ratio was 1.65 to 1 in favor of declining stocks.

The S&P 500 hit a new 52-week high and one new low; The Nasdaq Index posted 46 new highs and 169 new lows.

About 10.3 billion shares changed hands on US exchanges, compared to the daily average of 12.1 billion over the last 20 sessions.

Additional reporting by Louis Krauskopf in New York and Pansari Mayur Kamdar, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Vinay Dwivedi, Arun Koyoor, and David Gregorio

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