On Wednesday, the Nasdaq Composite extended its losing streak for the third straight session, as investors moved away from growth stocks following indications of a weakening US economy. The tech-heavy index dropped 1.07% to 11,996.86, while the broader S&P 500 declined by 0.25% to 4,090.38. Meanwhile, the Dow Jones Industrial Average gained 80.34 points, or 0.24%, to finish at 33,482.72, propelled by the outperformance of health-care stocks.
The latest ADP private payrolls report, released on Wednesday, revealed a slowdown in job growth in March, which, combined with Tuesday’s job openings report, suggests that the Federal Reserve’s efforts to cool the labour market may be having an impact. For the first time in almost two years, the number of available positions fell below 10 million in February. Equities increased during Q1 but remain far from their all-time highs.
High-growth tech stocks were under pressure on Wednesday, with Zscaler and CrowdStrike falling 8.3% and 6.6%, respectively. Chip stocks were also under pressure, with Advanced Micro Devices dropping more than 3%. The defensive tilt of the market helped health care stocks outperform, boosting the Dow. Following Johnson & Johnson’s announcement on Tuesday that it would pay $8.9 billion over the next 25 years to settle claims that its talc products caused cancer, the pharmaceutical company’s shares surged 4.5%. Utilities stocks also outperformed.
Overnight, the Reserve Bank of New Zealand raised rates by 50 basis points, stating that inflation was “too high and persistent.” Cleveland Fed President Loretta Mester said on Tuesday night that she believed the US central bank still needed to raise rates further. According to Angelo Kourkafas, an investment strategist at Edward Jones, “directionally, I think the move higher made sense, but at the same time the course is not yet clear. We doubt the market will whistle through any potential economic slowdown and growth concerns, which we have seen over the past two days.”
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