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U.S. service sector slows in March; inflation cools
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March private payrolls miss estimates
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FedEx up, says to consolidate operating divisions
(Updates with end of trading session)
By Noel Randewich and Ankika Biswas
April 5 (Reuters) - The S&P 500 and the Nasdaq ended
lower on Wednesday after a growing wave of weak economic data
deepened worries that the Federal Reserve's rapid interest rate
hikes might tip the U.S. economy into a recession.
Nvidia Corp was among the stocks weighing most on
the S&P 500 after Alphabet Inc's Google unit said the
supercomputers it uses to train its artificial intelligence
models were faster and more power-efficient than comparable
components made by the chipmaker.
Tesla Inc , Amazon , Apple and
Microsoft all declined, pulling down the Nasdaq and
reversing gains in some of Wall Street's most valuable companies
in recent weeks.
Caterpillar , viewed as a bellwether for the
industrial sector, dropped for a second day as investors fretted
about a potential economic downturn.
According to preliminary data, the S&P 500 lost 10.40
points, or 0.25%, to end at 4,090.20 points, while the Nasdaq
Composite lost 129.46 points, or 1.07%, to 11,996.86.
The Dow Jones Industrial Average rose 81.29 points, or
0.24%, to 33,483.67.
Driving the recession fears, the ADP National Employment report showed U.S. private employers hired far fewer workers than expected in March. That followed Tuesday's weak job openings data. As well, the Institute for Supply Management's survey showed the services sector slowed more than expected last month on cooling demand, while a measure of prices paid by services businesses fell to a near three-year low. Earlier this week data showed falling factory orders and soft manufacturing activity. Wall Street's recent losses in reaction to signs of a slowing economy mark a change from recent months, when investors cheered weak economic data on the basis that it might mean the Fed's interest rate hikes were working and that the Fed could ease up on its campaign to rein in decades-high inflation.
"We may have transitioned from the notion that 'bad news is good news' to 'bad new is bad news'," said Jay Hatfield, chief executive and portfolio manager at InfraCap in New York. "Fear about a recession is the dominant theme." Reflecting worries about the economy and recent turmoil in the banking sector, interest rate futures imply 61% odds that the Fed will cut interest rates from current levels by the end of its July meeting, according to CME Group's Fedwatch tool.
Among rising stocks within the Dow Jones Industrial Average, Johnson & Johnson gained after its $8.9 billion offer to settle talc-related lawsuits gained the support of thousands of claimants, easing an overhang on its plans to list consumer health unit Kenvue. Artificial intelligence C3.ai Inc tumbled for a second day after a short seller alleged accounting issues. The AI company denied the allegations in an emailed response to Reuters. FedEx Corp rose as the freight bellwether firm said it will fold its operating divisions into one organization as it steps up efforts to cut costs and increase efficiency. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Traders bet on Fed rate cut by July meeting Traders bet on Fed rate cut by July meeting S&P 500's busiest trades ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by Nivedita Bhattacharjee, Shounak Dasgupta and Deepa Babington)
