Wall Street drops as hawkish Fed official comments weigh

  • Fed Bullard supports rate hike
  • The data shows that the US labor market remains very tight
  • Cisco shares rise after the company raises its full-year outlook
  • Jumps on Macy’s profit forecast rise
  • Indexes down: Dow 0.02%, S&P 0.31%, Nasdaq 0.35%

Nov 17 (Reuters) – Wall Street’s main indexes ended lower in a surprise session on Thursday as dovish comments from U.S. Federal Reserve officials and data showed the labor market remained tight. The number has led investors to worry about rising interest rates.

St. Louis Fed President James Bullard said the central bank should continue to raise rates because its tightening so far has had “only a limited impact on observed inflation.”

Stocks have retreated in recent days after being buoyed by a month-long run of better-than-expected inflation reports that raised hopes that the Fed will reduce rate hikes.

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“The Fed is still generally talking about interest rates,” said Paul Nolte, portfolio manager at Kingview Investment Management in Chicago. “There may be some disagreement about the pace. But interest rates are never coming down quickly.”

Stocks pared losses late in the session but major indexes still ended in negative territory.

The Dow Jones Industrial Average (.DJI) fell 7.51 points, or 0.02%, to 33,546.32, the S&P 500 (.SPX) added 12.23 points, or 0.31%, to 3,946.56 and the Nasdaq dropped 0.02%. 0.35%, up to 11,144.96.

Data showed that the number of Americans filing new claims for unemployment benefits fell last week, suggesting the job market remains tight. A report on Wednesday detailed strong growth in retail sales last month, indicating that the economy has weathered price hikes.

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

Shares of Cisco Systems ( CSCO.O ) rose 5% after the company raised its full-year revenue and profit forecast citing supply chain disruptions. The stock helped the S&P 500’s information technology sector (.SPLRCT) gain 0.2%.

Most S&P 500 sectors ended lower, however, with utilities (.SPLRCU) down 1.8% and consumer discretionary (.SPLRCD) down about 1.3%.

In company news, Macy’s ( MN ) shares rose 15% after the department store chain raised its annual profit forecast on resilient demand for high-end apparel and beauty products.

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Emerging issues on the NYSE declined by a ratio of 2.06 to 1; On the Nasdaq, a ratio of 1.65 to 1 favors declines.

S&P 500 posts 1 new 52-week high and 1 new low; The Nasdaq Composite posted 46 new highs and 169 new lows.

About 10.3 billion shares changed hands on U.S. exchanges, compared with the 12.1 billion daily average over the past 20 sessions.

Reporting by Lewis Kraskov in New York, Bansari Mayur Kamdar, Ankika Biswas and Amruta Khandekar in Bangalore; Editing by Vinnie Dwight, Arvin Quiver and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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