Stocks finished firmly lower Thursday, while the dollar bumped higher against its global peers, as investors sifted through details of the Federal Reserve's inflation debate and focused on stronger-than-expected jobs data that has rekindled inflation concerns.
Minutes from the Fed's December policy meeting, when officials agreed their seventh rate hike of the year, indicated concern that financial markets, as well as the public, would question the central bank's resolve to fight inflation if it were to signal softer-near term rate hikes.
As it stands, the Fed is prepared to endure "below trend growth" in order to ease inflationary pressures, adding policymakers would need to see it "substantially more evidence of progress to be confident that inflation was on a sustained downward path.”
The Fed also emphasized the strength of the labor market as playing an important role in its inflation fight, according to minutes from its December policy meeting, putting the coming round of jobs data in sharp focus for traders on Wall Street.
The minutes indicated that Fed governors are seeing "tentative signs that labor market balances are improving", but noted "large imbalances between labor supply and labor demand, as indicated by the still-large number of job openings and elevated nominal wage growth ”
JOLTs data for the month of November, published yesterday, indicated around 10.45 million open positions, a level that could feed in to wage growth over the coming months, although the Challenger job cuts report for December, published Thursday, said layoffs rose 129% from last year to 76,800.
Tech has lead the way in staff reductions, with Amazon (AMZN) confirming plans to cut 18,000 jobs from its 1.6 million global workforce amid what it called an "uncertain and difficult" global economy.
ADP's national employment report, however, showed private sector hiring accelerated to 245,000 in December, while weekly jobless claims for the period ending on December 31 fell by 20,000 to 204,000.
The hawkish Fed minutes, as well as the strong jobs data, boosted bets on another 50 basis point rate hike next month, with the odds rising to 44% from around 27.2% last week.
Benchmark 10-year Treasury note yields were higher from last night's levels at 3.71% while 2-year notes rose to 4.46%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.9% higher at 105.15.
The Dow Jones Industrial Average ended down 339 points, or 1.02%, to 32,930, while the S&P 500 was marked 1.16% lower while the tech-focused Nasdaq lost 1.47%.
The CBOE's VIX volatility gauge was pegged at 22.46 points in the New York session, suggesting daily moves for the S&P 500 of around 55 points over the next 30 days, the highest since mid-December.
In terms of individual stocks, Walgreens Boots Alliance (WBA), a Dow component, fell 6.1% after it posted better-than-expected first quarter earnings, while lifting its full-year sales forecast, but booked a $6.5 billion charged linked to opioid settlements.
Crypto lender Silvergate Capital (SI )tumbled 42.6% after it said the collapse of FTX lead to a rush of withdraws amid what it called a "crisis of confidence across the digital asset ecosystem."
Johnson & Johnson (JNJ) shares, meanwhile edged nearly 1% lower after the group unveiled plans to list its consumer healthcare division as a stand-alone company with around $15 billion in annual sales.
Overnight trading was mixed, with Asia's MSCI ex-Japan index rising 0.78% into the close of trading following news that China's border with Hong Kong would be opened after nearly three years lifted stocks on the mainline, while Europe's Stoxx 600 gained 0.15% in Frankfurt following last night's paring of gains on Wall Street.
