Wall Street falls on solid US jobs data

Wall Street’s main indexes have fallen, with technology stocks bearing the brunt of a sell-off after a solid jobs report bolstered the case for the Federal Reserve to press ahead with interest rate hikes.

US employers hired far more workers than expected in July, the 19th straight month of payrolls expansion, with the unemployment rate falling to a pre-pandemic low of 3.5 per cent.

The report provided the strongest evidence yet that the economy was not in recession.

“It is a blockbuster number, clears the path for the Fed to continue with the hawkish viewpoints that have been expressed recently. I think a 75 basis points hike in September is most likely,” said Dean Smith, chief strategist at FolioBeyond.

“There was such a strong urge for people to call the all clear on inflation and we are just not there. Inflation is becoming more embedded and it is actually accelerating, not decelerating.”

Growth index, which houses technology and related stocks, fell as US Treasury yields extended their rise after the report.

Shares of Tesla Inc and Amazon.com were down 2.2 per cent and 1.3 per cent respectively.

Several policymakers have this week said the US central bank remained determined to stick to its aggressive policy tightening stance until it saw strong and long-lasting evidence that inflation was trending toward the Fed’s 2.0 per cent goal.

Markets are now pricing in a 65.5 per cent chance of a 75 basis point rate hike in September, up from 40 per cent before the data.

The central bank has already increased rates by 2.25 percentage points so far this year.

Worries about a surge in borrowing costs, the war in Ukraine, Europe’s energy crisis and COVID-19 flare-ups in China have rattled equities this year and prompted analysts to adjust their earnings expectations for US corporations.

However, a largely upbeat second-quarter earnings season, coupled with a strong batch of economic data, has helped the S&P 500 bounce back nearly 13.6 per cent from its mid-June lows after a rough first-half performance.

“(Today’s data) is another solid reminder that we are not in a recession and likely recession isn’t anywhere,” Ryan Detrick chief market strategist at Carson Group said.

“That’s probably still more of a positive thing than not, no matter what Fed policy is… that’s still a major tailwind eventually for equities to continue to bounce back this year”.

In early trading, the Dow Jones Industrial Average was down 134.01 points, or 0.41 per cent, at 32,592.81, the S&P 500 was down 27.03 points, or 0.65 per cent, at 4,124.91, and the Nasdaq Composite was down 135.90 points, or 1.07 per cent, at 12,584.68.

Lyft Inc rose 4.6 per cent as the ride-hailing firm forecast an adjusted operating profit of $US1 billion ($A1.4 billion) for 2024 after posting record quarterly earnings.

Block Inc fell 2.8 per cent as the digital payments company reported a loss in quarterly results on waning interest in cryptocurrencies.

Declining issues outnumbered advancers for a 3.25-to-1 ratio on the NYSE and for a 2.30-to-1 ratio on the Nasdaq.

The S&P index recorded three new 52-week highs and 30 new lows while the Nasdaq recorded 11 new highs and 28 new lows.