The Dow Jones fell 0.76 percent to 33,044 points, and the S&P 500 fell at the same rate and slipped to 3,898 points. The Nasdaq index fell 0.96 percent to 10,852 points.
Indices came under pressure after new data showed the US labor market remained strong. Last week, the number of claims for unemployment benefits was lower than expected. As the Fed seeks to weaken labor demand and labor costs, among other things, the data means the US central bank could raise interest rates to higher levels than expected.
In the first two weeks of this year, stock prices rose significantly as inflationary pressures in the United States eased somewhat, and speculations prevailed that the Fed could be less aggressive in tightening monetary policy.
Fighting Inflation
Most Fed leaders say they must increase key interest rates above the five percent level to curb inflation. That would be higher than traders expect, given that the money market estimates that the final interest rate at which the Fed would stop the hike cycle could be 4.89 percent.
The focus of investors these days is the quarterly business results of banks and companies, which could be more impressive.
Analysts estimate that companies’ earnings from the S&P 500 index fell by 2.8 percent in the fourth quarter of last year compared to the same period in 2021 due to high inflation and slowing economic growth. Two weeks ago, wages were expected to fall by 1.6 percent.
Share prices fell on European stock markets as well. The London FTSE index fell 1.07 percent to 7,747 points, the Frankfurt DAX slipped 1.72 percent to 14,920 points, and the Paris CAC dropped 1.86 percent to 6,951 points.
