U.S. stocks closed lower on Wednesday, as investors weighed a mixed picture of the labor market and the prospects of monetary policy tightening.
The Dow Jones Industrial Average fell 0.3%, or 85 points, to 35,058. The S&P 500 declined 0.1%, or 4 points, to 4,514. The Nasdaq Composite edged down less than 0.1%, or 2 points, to 15,248.
The Labor Department reported that the U.S. economy added 235,000 jobs in June, the smallest gain since December 2020 and well below the consensus estimate of 720,000. The unemployment rate dropped to 4.8%, a new pandemic low, while average hourly earnings rose 0.4% month-over-month and 4.6% year-over-year.
The jobs data suggested that the labor market recovery may be losing momentum amid the resurgence of Covid-19 cases driven by the Delta variant. However, it also showed signs of wage inflation and labor shortages, which could put pressure on the Federal Reserve to start tapering its bond-buying program sooner rather than later.
The Fed released the minutes of its July meeting, which showed that most officials agreed that it could be appropriate to start reducing the pace of asset purchases this year if the economy continued to make progress toward the central bank’s goals of maximum employment and stable prices. However, some participants preferred to wait for more evidence of a robust recovery before making a decision.
The minutes also indicated that there was no consensus on the timing or pace of tapering, and that the Fed would provide advance notice before announcing any changes to its policy stance. The Fed reiterated that tapering would not imply any change in its plans to keep interest rates near zero until the economy reached a more complete recovery.
Investors are looking for clues on when and how the Fed will start unwinding its unprecedented stimulus measures, which have supported the stock market rally since the pandemic-induced crash in March 2020. Some analysts expect the Fed to announce its tapering plans at its next meeting in September or at its annual symposium in Jackson Hole later this month.
Among individual stocks, Apple Inc. (AAPL) rose 1.2% to a record high of $157.26, after becoming the first U.S. company to surpass $3 trillion in market capitalization on Tuesday. The tech giant benefited from strong demand for its products and services amid the pandemic and from optimism about its future growth prospects.
On the other hand, CMC Markets PLC (CMCX.L) plunged 13.6% to 362 pence, after announcing that its chief financial officer Euan Marshall would leave the company to join rival IntegraFin Holdings PLC (IHP.L) as its new finance director. The online trading platform said it had started a search for Marshall’s successor and that he would remain in his role until a replacement was appointed.
