U.S. stock indexes edged lower on Tuesday as labor market data heightened concerns about economic weakness, compounded by profit-taking in some of Wall Street’s high-performing stocks.
The Labor Department reported that job openings fell to 8.05 million in April, below the forecasted 8.35 million, ahead of the highly anticipated nonfarm payrolls figures for May, due on Friday. This data follows a series of reports suggesting a slowdown in the U.S. economy, leading markets to anticipate an earlier start to interest-rate cuts by the Federal Reserve.
Treasury bond yields dipped following the report. Expectations for a rate cut in September have now risen to around 65%, up from below 50% last week, according to the CME’s FedWatch tool. Ronald Temple, chief market strategist at Lazard, noted, “The evidence is accumulating that the Fed should begin easing… fewer workers are quitting each month, clearly signaling fewer opportunities to earn higher wages by switching jobs.”
Despite the increased likelihood of rate cuts, stock indexes remained in negative territory, driven by profit-taking in megacap tech and chip stocks, which have been key drivers of recent market rallies. Amazon.com (AMZN.O), Meta (META.O), and Microsoft (MSFT.O) were among the biggest drags on the S&P 500, each falling between 0.1% and 0.6%. The semiconductor index (.SOX) dropped 1.4%.
“The absence of corporate news suggests a sideways trending market, which seems to be where we are right now. Strong year-to-date returns are a reason for some near-term profit-taking, and certainly some portfolio rebalancing,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
The Commerce Department reported that orders for manufactured goods rose 0.7% in April, surpassing economists’ expectations of a 0.6% increase.
Oil giants Exxon Mobil (XOM.N) and Chevron (CVX.N) fell 2.3% and 1.5%, respectively, as concerns over demand weighed on crude prices. Energy stocks (.SPNY) led sector declines in the S&P 500, dropping 1.5%.
Small-cap stocks (.RUT), which are typically more sensitive to economic conditions, fell 1.2%, while the rate-sensitive real estate sector (.SPLRCR) gained 0.9%.
At 12:10 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 69.26 points, or 0.18%, at 38,501.77. The S&P 500 (.SPX) dropped 24.42 points, or 0.46%, to 5,258.98, and the Nasdaq Composite (.IXIC) declined 74.65 points, or 0.44%, to 16,754.02.
Other notable movers included Bath & Body Works (BBWI.N), which slumped 14% following a downward revision of its quarterly profit forecast. Axos Financial (AX.N) plunged 7.3% after Hindenburg Research disclosed a short position in the lender. Paramount Global (PARA.O) lost 4.1% after announcing it was exploring strategic options or a joint venture for its Paramount+ streaming service.
Declining issues outnumbered advancers by a 1.85-to-1 ratio on the NYSE and by a 2.15-to-1 ratio on the Nasdaq. The S&P index recorded 10 new 52-week highs and four new lows, while the Nasdaq recorded 25 new highs and 92 new lows.
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