US stocks drop as market eyes more Fed rate hikes

Wall Street

Wall Street stocks tumbled early Thursday as markets bet on further Federal Reserve interest rate increases following another round of positive US employment data.

Payroll firm ADP estimated that private employers added 497,000 new jobs in June, more than double the median forecast of economists surveyed by MarketWatch.

The report comes ahead of Friday's closely watched government jobs data. The strength of the US jobs market has surprised economists who expected a bigger hit from Fed's aggressive policies to counter inflation.

About 15 minutes into trading, the Dow Jones Industrial Average was down 1.0 percent at 33,937.03.

The broad-based S&P 500 also slid 1.0 percent to 4,400.99, while the tech-rich Nasdaq Composite Index dropped 1.1 percent to 13,634.06.

The yield on the 10-year US Treasury note, seen as a proxy for Fed expectations, pushed above four percent as futures markets predict another rate increase at the July 26 meeting.

Citing the equity market's gains through the first half of 2023, Briefing.com analyst Patrick O'Hare said the market's current reticence may also be "a byproduct of the belief that the market is due for a period of consolidation."