US shares began the month down as a solid batch of data suggested the Federal Reserve had not yet slowed growth enough to rein in inflation, while Jamie Dimon of JPMorgan Chase & Co. cautioned that tight policies may tip the economy into recession.
The S&P 500 index sank 0.8% after data revealed an unexpected increase in US industrial activity as well as unusually large job vacancies, raising concerns that the Fed will need to tighten its monetary policy to rein in price inflation. After Dimon indicated that as conditions tighten, private borrowers may become stranded, banking firms in the index fell 1.7%..
The yield on 10-year treasuries jumped as traders increased their wagers on rate rises. Oil prices climbed ahead of a meeting of OPEC+ to review supply policies. and technology stocks outperformed, with Salesforce inc. up 10%. After boosting its prediction, the business-software behemoth soared the most in nearly two years, indicating that demand is strong.
The positive data arrived in a market where investors are worried that the Fed's tightening policies could trigger a recession, a concern echoed by Dimon's remarks. Since March, the central bank has lifted rates twice and has indicated that it will raise rates by another 50 basis points at its next two sessions.
While certain economic data has begun to decline, according to the Fed's Beige Book, others are still strong enough that investors believe the odds of a third 50-point hike are increasing. On Wednesday, St. Louis Fed President James Bullard urged policymakers to hike interest rates rapidly before cutting them later.