Wall Street’s S&P 500 stock index fell on Thursday as hawkish comments from a U.S. Federal Reserve official and data showing the labor market remained tight led some investors to worry about more aggressive interest rate hikes.
St. Louis Fed President James Bullard said the central bank needs to keep raising rates given that its tightening so far “had only limited effects on observed inflation.”
Stocks have retreated in recent days after a strong month-long rally spurred by softer-than-expected inflation reports that raised hopes the Fed would temper its rate hikes.
“The Fed is still talking up, generally, interest rates,” said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago. “There might be some disagreement about the pace. But interest rates are not coming down anytime soon.”
According to preliminary data, the S&P 500 (.SPX) lost 11.01 points, or 0.26%, to end at 3,947.78 points, while the Nasdaq Composite (.IXIC) lost 38.23 points, or 0.34%, to 11,145.43. The Dow Jones Industrial Average (.DJI) fell 2.18 points, or 0.02%, to 33,556.09.
Data showed the number of Americans filing new claims for unemployment benefits fell last week, suggesting the labor market remained tight. A report on Wednesday detailed strong retail sales growth last month, indicating the economy has weathered rate hikes.
Bets from traders of a 75 basis point hike at the Fed’s next meeting climbed to 19% from about 15% a day earlier, according to the CME Group’s FedWatch tool. Most investors still expect a 50 basis point increase.