US Market tumbles ahead of jobs data, rate hike woes

The US stock market finished the session deeply in negative territory on Thursday, 05 January 2023, as selloff resumed after new employment data came in stronger than expected and on caution before the U.S. jobs data due tomorrow that should provide clues on how aggressive the Federal Reserve will be in tightening policy.

At the close of trade, the Dow Jones Industrial Average index tumbled 339.69 points, or 1.02%, to 32,930.08. The S&P500 index dropped 44.87 points, or 1.16%, to 3,808.10. The tech-heavy Nasdaq Composite Index decreased 153.52 points, or 1.47%, to 10,305.24.

Total 9 of 10 sectors ended lower along with the S&P500 Index. Real estate was the bottom performing sector, falling 2.9%, followed by utilities (down 2.2%), information technology (down 2%), and materials (down 1.6%) sector. Energy sector was top performing issue, gaining 2%).

The weakness on Wall Street came following the release of a report from payroll processor ADP showing private sector employment in the U.S. jumped by much more than expected in the month of December.

ADP's private payroll report said employers added 235,000 jobs in December, after rising by 127,000 jobs in November, stoking fears that the Federal Reserve would keep interest rates higher for longer.

The Labor Department released a report today showing initial jobless claims slipped to 204,000, a decrease of 19,000 from the previous week's revised level of 223,000.

The Fed has been closely watching Labor Department employment report for the month of December due on Friday as it decides on the direction of interest rate increases to tame inflation.

The Fed has already signaled rates would stay higher for a prolonged period, though it seems to be on a path of slowing the pace of its rate hikes. Its December decision raised rates by a half-percentage point, slower than the previous four meetings.

Among Indian ADR, HDFC Bank fell 1.3% to $66.96, Wipro fell 1.9% to $4.60, INFOSYS was down 2.3% at $17.68, and Tata Motors sank 0.7% at $22.99. WNS Holdings declined 1.1% to $79.65, ICICI Bank sank 3.4% to $21.20, Dr Reddy's labs fell 0.8% to $51.61, Azure Power Global dropped 2.8% to $4.12.

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