Stocks mostly fell Wednesday as investors focused on fresh signs of a slowing U.S. economy.
The S&P 500 dropped for a second day, closing down 10.22 points, or 0.2%, at 4090.38. The tech-heavy Nasdaq Composite dropped 129.47 points, or 1.1%, to 11996.86. The Dow Jones Industrial Average was the outlier, inching up 80.34 points, or 0.2%, to 33482.72.
Data this week has suggested the labor market is weakening. A report Wednesday from payroll-processing firm ADP suggested nonfarm private sector employment rose by 145,000 in March, down from a 261,000 gain in February and below economists’ expectations. That came a day after a Labor Department report showed job openings fell to the lowest level since 2021 in February, a sign that demand for workers is beginning to slow.
Marija Veitmane, head of equity research at State Street, said investors have shifted their attention away from March’s banking turmoil and back to the risk of a recession that could drag down consumer spending and corporate profits.
“I’m in the camp that bad news is bad news,” said Ms. Veitmane. “This week, we’re getting this realization that we’re avoiding a banking crisis but economic fears are still there. We’re going from financial crisis to cyclical slowdown.”
Treasury yields dropped again, with the yield on the 10-year note falling to 3.285% from 3.335% a day earlier.
Investors are shifting their focus away from banking troubles.
Photo:
Victor J. Blue/Bloomberg News
“Recession risks have increased,”
Mark Haefele,
chief investment officer at UBS Global Wealth Management, wrote in a note to clients. “As the slowdown of the U.S. economy becomes more apparent, we think investors should prepare for a peak in interest rates by considering opportunities in bonds.”
Economically sensitive sectors of the S&P 500, including industrials, materials and real estate, have underperformed since bank stress came to the forefront in early March. All are down more than 4% over the last month. Some traders appear to be betting that a slowdown in regional bank lending to smaller businesses will reverberate through the economy, ultimately curbing growth and hitting economically sensitive sectors hardest.
The utilities sector, typically considered a haven, was the best performer Wednesday, adding 2.6%.
Traders will get another look at the health of the U.S. economy on Friday with the release of the widely watched payrolls report. U.S. equity markets will be closed, however, in observance of Good Friday.
Some are welcoming weaker job numbers as a sign the Federal Reserve’s fight against inflation is making progress. A hot labor market and rising wages have been a major contributor to inflation.
Tuesday’s job-openings figures suggest that “labor supply and demand are moving into better balance,” said
Art Hogan,
chief market strategist at B Riley Wealth Management.
“Still, further progress is needed, particularly in the service sector, to help alleviate wage pressures,” Mr. Hogan added.
Among individual stocks,
was one of the S&P 500’s best performers, finishing the day up $7.12, or 4.5%, at $165.61 after the company proposed one of the biggest product-liability settlements ever for its talc-containing powders.
Electronic-bond trading platform
was the worst performer in the broad-based index, plunging $54.55, or 14%, to $337.74 a share after announcing first-quarter trading volume statistics.
Gold prices were little changed, closing at $2,020.90 a troy ounce, near a record high. Oil wavered, slightly adding to highs reached Monday after a Saudi-led group of producers vowed to cut output. Brent crude rose 0.1%.
Overseas, stocks mostly fell. The pan-European Stoxx 600 was down 0.2%. Japan’s Nikkei 225 fell 1.7%, though South Korea’s Kospi gained 0.6%. Markets in China were closed for a holiday.
Write to Jack Pitcher at jack.pitcher@wsj.com and Chelsey Dulaney at chelsey.dulaney@wsj.com
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