(The Herald Post) – Wall Street saw a decline on Monday, led by the Nasdaq as technology stocks took a hit due to growing concerns about the Federal Reserve’s continuing interest rate hikes. The market reacted to Friday’s job data, which showed a strong labor market and increased the likelihood of another rate hike in the near future.
Major technology companies Apple Inc, Microsoft Corp, and Alphabet Inc each experienced a drop of around 2%, while the information technology and communication services sectors saw losses of 0.8% and 1.0%, respectively. Additionally, Tesla Inc shares fell by 2% due to concerns over profitability following the electric-vehicle maker’s recent price cuts in the U.S. These factors contributed to the Nasdaq’s 0.7% decline.
Rate-sensitive real-estate stocks were also affected, shedding 0.9%. The strong pace of hiring by U.S. employers in March pushed the unemployment rate down to 3.5% and increased the odds of the Fed hiking rates once more next month. Sam Stovall, chief investment strategist at CFRA Research in New York, suggested that although the Fed is likely to raise rates by 25 basis points in May, it could be the last for this tightening cycle.
Following weak private payrolls and job openings data, hopes initially rose for a pause in the rate hikes, particularly in light of recent turmoil in the banking sector. However, the odds of a 25-basis point rate hike by the Fed in May climbed to 68% after Friday’s jobs data, up from 57% last week, as reported by CME Group’s Fedwatch tool. This week, attention will shift to U.S. consumer and producer prices data, the Fed’s March meeting minutes, and quarterly results from major U.S. banks such as JPMorgan Chase & Co, Citigroup Inc, and Wells Fargo & Co.