Wall Street’s main indices closed more than 1% lower on Thursday, after fresh evidence of a tightening labor market dashed any investors’ hopes that the Federal Reserve might soon halt its rate-raising cycle as focus remains on inflation.
Thursday’s national employment report showed a higher-than-expected rise in private employment in December. Another report showed that weekly jobless claims fell last week.
The number of employees in the private sector increased by 235,000 last month, led by small and medium-sized companies, according to data from the ADP Research Institute in collaboration with the Digital Economy Lab at Stanford. The number beat all but one forecast in a Bloomberg survey of economists.
Another set of data, Wednesday, showed a moderate decline in job opportunities in the United States. While a strong labor market is usually welcomed as a sign of economic strength, investors currently see it as a reason for the Fed to keep interest rates high.
The Standard & Poor’s 500 index lost 44.74 points, or 1.16 percent, to close at 3,808.23 points, while the Nasdaq Composite Index lost 153.53 points, or 1.47 percent, to 10,305.23 points. The Dow Jones industrial average fell 339.18 points, or 1.02 percent, to 32,930.59 points.
In addition, the number of Americans filing new applications for unemployment benefits fell to a three-month low last week, while layoffs fell 43 percent in December.
The Labor Department said Thursday that first-time applications for state unemployment benefits fell by 19,000 to a seasonally adjusted figure to 204,000 in the week ending Dec. 31, the lowest level since the end of September. Economists polled by Archyde.com had expected 225,000 applications.