Jolted By JOLTS: Stock Market Sinks, Dollar And Treasuries Gain As Job Vacancies Surge, Fueling Fed Rate Hike Fears

The U.S. stock market tumbled on Wednesday following the release of the JOLTS report, which showcased an unexpected increase in job vacancies to 10.1 million, surpassing the anticipated 9.375 million.

This development has reinforced market speculation of the Federal Reserve enacting another interest rate hike in June. U.S. rate futures now indicate a 71% probability of a June rate hike, up from roughly over 60% late Tuesday. 

Meanwhile, investors remain closely attuned to the progress on the debt ceiling raise, with the House scheduled to vote on the bill later Wednesday after clearing the Rules Committee on Tuesday with a 7-6 vote.

Cues From Wednesday’s Trading:

All major averages traded in the red, with the Nasdaq 100 index, the S&P 500 and the Dow Jones Industrial Average all falling 0.8%. Small caps in the Russell 2000 nosedived 1.8%.

Analyst Color:

The pullback in consumer confidence to a six-month low in May, according to Bolvin Wealth Management’s Gina Bolvin, is another “bullish contrarian indicator.”

“With over $5 trillion in cash on the sidelines, strong stock market momentum and debt ceiling drama closer to resolving, we think there is a good reason for stocks to perform well this year,” the fund manager said.

Bolvin sees upside coming amid the volatility. “The next market-moving catalyst is this week’s jobs reports, which will influence the Fed. So far, the market is telling us the chances of a hike are increasing,” she added.

Wednesday's Trading In Major US Equity ETFs: In midday trading on Wednesday, the SPDR S&P 500 ETF Trust SPY was 0.8% lower to $416.77, the SPDR Dow Jones Industrial Average ETF DIA fell 0.74% to $328.06 and the Invesco QQQ Trust QQQ was down 0.66% to $347.43, according to Benzinga Pro data.

Only defensive sectors — such as the Utilities Select Sector SPDR Fund XLU, the Health Care Select Sector SPDR Fund XLV and the Consumer Staples Select Sector SPDR Fund XLP — experienced minor gains, while the rest traded in the red. 

Sharp drops were seen in the Consumer Discretionary Select Sector SPDR Fund XLY, down 2%; the Financial Select Sector SPDR Fund XLF, down 1.6%; and the Industrials Select Sector SPDR Fund XLI, down 1.5%. 

Latest Economic Data:

The Mortgage Bankers Association reported a 3.7% drop in weekly mortgage application volume for the week ended May 26. 

Federal Reserve Governor Michelle Bowman said a real estate rebound could affect the Fed fight to ease inflation.

The Chicago Business Barometer, also known as the Chicago PMI, fell to 40.4 points in May 2023, down from an eight-month high of 48.6 in April and below market forecasts of 47. 

The Bureau of Labor Statistics reported an increase in JOLTS job openings data from 9.59 million in March to 10.1 million in April, above economists' expectations of 9.375 million. 

Fed Governor Philip Jefferson will make a public appearance at 1:30 p.m. EDT.

The Fed is due to release its Beige Book at 2 p.m. EDT, with the report providing anecdotal evidence of economic conditions in the 12 Fed districts.

See also: Best Futures Trading Software

Stocks In Focus:

• Advance Auto Parts, Inc. AAP plummeted over 33% after reporting weaker-than-expected earnings last quarter. 
• Hewlett-Packard Enterprises Company HPE, and HP, Inc. HPQ fell about 7% and about 4%, respectively, following their earnings announcements.
• NVIDIA Corp. NVDA and Advanced Micro Devices, Inc. AMD fell about 3.7% and 4.7% amid profit-taking behavior in the AI space. 
• Twilio, Inc. TWLO rose over 8% in premarket trading after a report suggested activist investor Legion is seeking board changes at the communications software provider.

• SoFi Technologies, Inc. SOFI soared 11.2%, as a debt ceiling deal may spark refinincing in student loans, likely fuelling company's revenues in the coming months.  

• Among those reporting after the close are C3.ai, Inc. AI, Chewy, Inc. CHWY, CrowdStrike Holdings, Inc. CRWD, NetApp, Inc. NTAP, Nordstrom, Inc. JWN, Okta, Inc. OKTA, PVH Corp. PVH and Salesforce, Inc. CRM.

Commodities, Bonds, Other Global Equity Markets:

Crude oil continued to fall 0.7%, with a barrel of WTI-grade crude falling to $69. The United States Oil Fund ETF USO fell 0.9% to $61.70 per share.  

Treasury yields slightly fell, with the 10-year yield up by 2 basis points to 3.66% and the two-year yield unchanged at 4.45%. The iShares 20+ Year Treasury Bond ETF TLT was 0.2% higher for the day. 

The dollar strengthened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.6%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.9% lower to 1.0641.

European equity indices plummeted. The SPDR DJ Euro STOXX 50 Etf FEZ fell 2%. 

Gold rose 0.4% to $1,965/oz. The SPDR Gold Trust GLD was 0.3% higher to $182. Silver rose 1.4% to $23.48, with the iShares Silver Trust SLV up 1.3% to $21.57 per unit. Bitcoin BTC/USD fell 2.7% to $26,954.

Staff writer Piero Cingari updated this report midday Wednesday. 

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