Wall Street closed lower as weak economic data fueled recession fears

(Reuters) – Wall Street closed lower on Tuesday after evidence of a slowing economy exacerbated concerns that the Federal Reserve’s decades-old campaign to rein in high inflation could cause a deep recession.

All three major indices fell as data showed that employment opportunities in the United States fell in February to their lowest level in nearly two years, indicating that the labor market was cooling, while factory orders fell for the second month in a row.

Monday’s data also indicated weak manufacturing activity in the United States.

“The number of job vacancies is down, which makes people worry that hiring is going too slowly, and that’s going to be bad for the economy. That’s feeding recession fears,” said Sal Bruno, chief investment officer at Index IQ in New York.

Bank stocks took a hit after JPMorgan Chase & Co (JPM.N) CEO Jamie Dimon warned in a letter to shareholders that the US banking crisis continues and its impact will be felt for years.

Bank of America (BAC.N) and Wells Fargo & Co (WFC.N) are down more than 2%, and the S&P 500 Banks Index (.SPXBK) is down 1.9%.

Of the 11 S&P 500 sector indices, seven were down, led by the Industrials (.SPLRCI), down 2.25%, followed by a 1.72% loss in Energy (.SPNY).

The S&P 500 fell 0.58% to end the session at 4,100.68 points, closing lower for the first time in a week.

The Nasdaq index fell 0.52%, to 12,126.33 points, while the Dow Jones Industrial Average fell 0.59%, to 33,403.04 points.

Caterpillar (CAT.N), considered a leader in the industrial sector, fell 5.4%.

Heavyweight chipmaker Nvidia (NVDA.O) lost 1.8%, weighing more than any other stock as the S&P 500 tumbled.

Health care (.SPXHC) and utilities (.SPLRCU), which many investors expect to withstand better during the economic downturn, were among the few S&P 500 sector indices that gained on Tuesday.

Trading in interest rate futures shows bets are now tilted towards a pause by the Federal Reserve in May, with odds of a 25 basis point rate hike at 42%, compared to nearly 60% before the data, according to CME Group’s Fedwatch tool.

So far in 2023, the S&P 500 has gained nearly 7% and is still down about 15% from its closing high in January 2022.

Virgin Orbit Holdings Inc (VORB.O) fell 23.2% after the satellite launch company filed for Chapter 11 bankruptcy for failing to secure long-term funding.

Shares of AMC Entertainment Holdings Inc (AMC.N) fell 23.5% after the movie theater chain said it had agreed to settle its litigation and move forward with converting its preferred stock into common stock.

Shares of Digital World Acquisition Corp (DWAC.O) fell 8% after SPAC, which is linked to former US President Donald Trump, delayed filing its annual financial report.

Trading volume on US stock exchanges was relatively light, with 10.3 billion shares changed hands, compared to an average of 12.8 billion shares during the previous 20 sessions.

Across the US Stock Market (.AD.US), decliners outnumbered gainers by a ratio of 2.2 to one.

S&P 500 records 14 new highs and 1 new low; The Nasdaq index posted 64 new highs and 238 new lows.

Additional reporting by Anika Biswas and Amrutha Khandekar in Bengaluru, and Noel Randewich in Oakland, California. Editing by Arun Koyoor, Shonak Dasgupta and Deepa Babbington

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