- US service sector activity picks up in November
- Tesla cuts Shanghai plant production plan for December sources
- All sectors of the S&P 500 fall, with a strong impact from energy stocks
- Indexes down: Dow 1.4%, S&P 1.79%, Nasdaq 1.93%
Dec 5 (Reuters) – U.S. markets ended lower on Monday as investors, spooked by better-than-expected services sector data, reassessed whether the Federal Reserve might raise rates of interest for longer, while Tesla shares fell on reports of a production. carved in china
The electric vehicle maker ( TSLA.O ) fell 6.4 percent on plans to cut December production of the Model Y at its Shanghai plant by more than 20 percent from the previous month.
That weighed on the Nasdaq, where Tesla was one of the biggest decliners, and sent the tech index down for a second straight fall.
Broadly, indexes suffered as data showed activity in the U.S. service industry unexpectedly picked up in November, with employment picking up, providing further evidence of momentum underlying economy.
The data came after a survey last week showed stronger-than-expected job and wage growth in November, defying hopes that the Fed could slow the pace and intensity of rate hikes amid last signs of reduction in inflation.
“Today is a little bit of a response to Friday, because this jobs report, which shows that the economy wasn’t slowing that much, was contrary to the message that (Chairman Jerome) Powell had delivered on Wednesday afternoon,” he said. said Bernard Drury, chief executive of Drury Capital, referring to comments by the head of the Federal Reserve that it was time to slow the pace of future interest rate hikes.
“We’re back in inflation-fighting mode,” Drury added.
Investors see an 89% chance the US central bank will raise interest rates by 50 basis points next week to 4.25%-4.50%, with rates peaking at 4.984% in May 2023.
The rate-setting Federal Open Market Committee meets Dec. 13-14, the last meeting of a volatile year in which the central bank has tried to halt a multi-decade rise in inflation with record rate hikes of interest
“Stock Exchange” is seen at the entrance to the New York Stock Exchange (NYSE) on Wall St. in New York City, U.S., March 29, 2021. REUTERS/Brendan McDermid/File Photo
Aggressive policy tightening has also fueled concerns of an economic recession, with JPMorgan, Citigroup and BlackRock among those who believe a recession is likely in 2023.
The Dow Jones Industrial Average (.DJI) fell 482.78 points, or 1.4%, to close at 33,947.1, the S&P 500 (.SPX) lost 72.86 points, or 1.79% , to end at 3,998.84, and the Nasdaq Composite (. dropped 221.56 points, or 1.93%, to end at 11,239.94.
In other economic data this week, investors will also monitor weekly jobless claims, producer prices and the University of Michigan consumer sentiment survey for more clues about the health of the economy north american
Energy (.SPNY) was one of the S&P’s biggest sector losers, down 2.9%. It was weighed down by US natural gas futures which fell more than 10% on Monday as the outlook darkened due to milder weather forecasts and a delay in the restart of a natural gas export plant liquefied natural gas (LNG) from Freeport.
EQT Corp ( EQT.N ), one of the largest U.S. natural gas producers, was the biggest decliner in the energy index, closing 7.2 percent lower.
Financials (.SPSY) were also hit hard, down 2.5%. While banks’ profits are usually boosted by rising interest rates, they are also sensitive to concerns about bad loans or slowing loan growth amid an economic downturn.
Meanwhile, apparel maker VF Corp ( VFC.N ) fell 11.2 percent, its biggest one-day drop since March 2020, after announcing the sudden departure of Chief Executive Officer Steve Rendle . The company, which owns names such as outdoor clothing brand The North Face and sneaker maker Vans, also cut its full-year sales and profit forecasts, blaming the weaker than expected consumer demand.
Volume on U.S. exchanges was 10.78 billion shares, compared with the full-session average of 11.04 billion over the past 20 trading days.
The S&P 500 hit six new 52-week highs and four new lows; the Nasdaq Composite posted 105 new highs and 133 new lows.
Reporting by Shubham Batra, Ankika Biswas, Johann M Cherian and Devik Jain in Bangalore and David French in New York; Editing by Anil D’Silva, Shounak Dasgupta and Lisa Shumaker
Our standards: the Thomson Reuters Trust Principles.