Wall Street’s main indexes slipped on Tuesday as evidence of a cooling economy exacerbated worries of a recession, with investor bets shifting in favor of a pause in the Federal Reserve’s interest rate hikes in May.
U.S. job openings in February dropped to the lowest level in nearly two years, suggesting that the labor market was cooling while factory orders fell for a second straight month.
Stocks were volatile after both the sets of data, which were in focus to gauge the strength of the economy and for clues on future interest rate hikes after a recent banking crisis.
Recent data on Monday had also pointed to weakening U.S. manufacturing activity.
“There is a lot of concern out there already because of the problems that the banks have experienced and the potential tightening of credit,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
“You combine that with weaker economic data and all of a sudden the Fed is pushed off to the back page and economic data is brought to the front page.”
Sectors closely tied to the economy such as industrials (.SPLRCI), materials (.SPLRCM) and energy (.SPNY) were the top losers on the S&P 500.
Defensive stocks such as healthcare (.SPXHC) and utilities (.SPLRCU), considered to hold up better during an economic slowdown, were among the few major sectors in the green.
Traders’ bets are tilted toward a pause by the Fed in May, with odds of a 25-basis point rate hike at 39.8%, compared with nearly 60% before the data, according to CME Group’s Fedwatch tool.
Despite the day’s declines, S&P 500 and the tech-heavy Nasdaq (.IXIC) have gained nearly 7% and 16% so far in 2023, steadying from their worst annual drop last year since the 2008 financial crisis.
At 11:41 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 214.15 points, or 0.64%, at 33,387.00, the S&P 500 (.SPX) was down 22.74 points, or 0.55%, at 4,101.77, and the Nasdaq Composite (.IXIC) was down 55.37 points, or 0.45%, at 12,134.08.
Among stocks, Virgin Orbit Holdings Inc (VORB.O) tanked 23.4% after the satellite launch company filed for Chapter 11 bankruptcy on failing to secure long-term funding.
AMC Entertainment Holdings Inc (AMC.N) shares tumbled 22.3% after the movie theater chain said it agreed to settle litigation and proceed with converting its preferred stock into common shares.
Shares of Digital World Acquisition Corp (DWAC.O) fell 7.9% after the SPAC linked to former U.S. President Donald Trump delayed the filing of its annual financial report.
Declining issues outnumbered advancers for a 2.82-to-1 ratio on the NYSE and a 2.51-to-1 ratio on the Nasdaq.
The S&P index recorded 12 new 52-week highs and no new low, while the Nasdaq recorded 53 new highs and 169 new lows.