Wall Street slides on rate hike jitters

US stock indexes have fallen for the fifth straight session as fresh signs of a tight labour market raised bets in favour of the Federal Reserve’s aggressive approach, lifting bond yields and pressuring growth stocks.

The weekly jobless claims fell more than expected last week and lay-offs dropped in August, consistent with strong demand for workers.

Investors now await the monthly non-farm payrolls report on Friday for more evidence on the labour market.

As the 10-year Treasury yield rose to its highest level since June 21, heavyweight technology and growth stocks such as Apple Inc, Amazon.com, Tesla Inc and Microsoft Corp fell between 0.3 per cent and 1.8 per cent.

Traders have raised their expectation of a third straight 75 basis points increase in rates in September to 77.1 per cent from 74 per cent despite mixed signals on inflation.

Latest data showed a further easing in price pressures while manufacturing grew steadily in August thanks to a rebound in employment and new orders.

“The market has its dead eyes on re-testing the June lows. We will see how it goes after Friday’s non-farm payroll report and how things go once we get back into a full week after the Labor Day,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.

“Powell’s comments put the realism back into the market… people that have gotten in since the bounce off the lows in June are quickly moving to the sidelines.”

The benchmark S&P 500 has dropped 9.6 per cent since hitting a four-month high in August, with much of the losses triggered by Fed Chair Jerome Powell’s hawkish view on interest rate hikes.

Investors are worried about how much and how long the Fed will raise rates, with Wall Street’s main indexes recording their weakest August performance in seven years in the previous session.

In early trading, the Dow Jones Industrial Average was down 269.08 points, or 0.85 per cent, at 31,241.35, the S&P 500 was down 44.41 points, or 1.12 per cent, at 3,910.59, and the Nasdaq Composite was down 188.01 points, or 1.59 per cent, at 11,628.20.

Boeing Co dipped 4.6 per cent as the plane maker expects its 737 MAX 10 jet to be certified by US regulators next year and the MAX 7 variant by the end of 2022.

Nvidia Corp dropped 8.8 per cent after US officials told the chip designer to stop exporting two top computing chips for artificial intelligence work to China.

Advanced Micro Devices Inc slid 5.5 per cent after it was told to stop exporting its top artificial intelligence chip to China.

Qualcomm Inc slipped 4.5 per cent after the UK-based chip firm Arm sued the chipmaker and its recently acquired chip design firm Nuvia Inc for breach of licence agreements and trademark infringement.

Hormel Foods Corporation fell 6.1 per cent after packaged foods maker cut its full-year profit forecast.

Declining issues outnumbered advancers for a 8.22-to-1 ratio on the NYSE and for a 4.93-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week highs and 30 new lows while the Nasdaq recorded nine new highs and 235 new lows.