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Wall Street heads lower, bond yields steady ahead of jobs report, holiday weekend


U.S. stocks headed lower and Treasury yields halted their plunge on Thursday, as investors digested weak labor market data and looked to Friday’s jobs report for signs the Federal Reserve’s restrictive policy could be edging the economy closer to recession.

All three major U.S. stock indexes were red, with the S&P 500 and the Nasdaq on course to snap three-week winning streaks at the conclusion of the holiday-shortened week.

Economic data released on Thursday suggested the U.S. labor market is feeling the effects of the Federal Reserve’s string of hawkish interest rate hikes in its attempt to cool down the economy and, in so doing, rein in inflation.

On Friday, a market holiday, the Labor Department is due to release its March employment report, and market participants will have the weekend to digest the data before Monday’s opening bell.

“We have had a few days in a row of weak economic data,” said Tom Hanlin, national investment strategist at US Bank Wealth Management in Minneapolis. “The question is are we seeing a slowing economy, will the Fed continue to raise interest rates, and will this result in a recession this year?”

At last glance, financial markets have priced in a 52% likelihood that the central bank will leave the Fed funds target rate at the 4.75% to 5.00% range at the conclusion of their next monetary policy meeting in May, according to CME’s FedWatch tool.

“It’s kind of a 50/50 from investors whether there will be a rate hike at the next Fed meeting,” Hanlin added. “Investors are pricing in rate cuts before year-end, but the Fed has said they will keep rates at a high level for as long as it takes.

“That gap is what’s causing volatility in the markets.”

The Dow Jones Industrial Average (.DJI) fell 124.95 points, or 0.37%, to 33,357.77, the S&P 500 (.SPX) lost 13.4 points, or 0.33%, to 4,076.98 and the Nasdaq Composite (.IXIC) dropped 39.68 points, or 0.33%, to 11,957.18.

European stocks moved in the opposite direction as gains in real estate and travel helped offset concerns over a U.S. economic slowdown.

The pan-European STOXX 600 index (.STOXX) rose 0.49% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) shed 0.27%.

Emerging market stocks lost 0.37%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.46% lower, while Japan’s Nikkei (.N225) lost 1.22%.

Treasury yields steadied after recent sharp declines following the jobless claims report.

Benchmark 10-year notes last rose 3/32 in price to yield 3.2773%, down from 3.287% late on Wednesday.

The 30-year bond last rose 10/32 in price to yield 3.5413%, down from 3.557% late on Wednesday.

The greenback seesawed against a basket of world currencies in advance of Friday’s nonfarm payrolls report, which falls on a market holiday.

The dollar index rose 0.1%, with the euro up 0.12% to $1.0916.

The Japanese yen weakened 0.35% versus the greenback at 131.79 per dollar, while Sterling was last trading at $1.2431, down 0.21% on the day.

Crude prices edged lower, but remained on course for a weekly gain in the wake of OPEC+ production cuts and a drop in U.S. oil inventories.

U.S. crude fell 0.14% to $80.50 per barrel and Brent was last at $84.86, down 0.15% on the day.

Gold headed lower, but the safe-haven metal was on track for a weekly gain amid growing recession jitters.

Spot gold dropped 0.5% to $2,009.98 an ounce.

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