Stocks finished lower Wednesday, while the dollar built on gains against its global peers, as investors worried that surprisingly solid jobs data, as well as record high inflation in Europe, will keep the Fed on its rate hike path heading into the back half of the year.
Yesterday's Job Openings and Labor Turnover Survey from the Labor Department, known in the market as JOLTs, showed that nearly 11.24 million positions went unfilled last month, or nearly two for every unemployed person in the country.
The reading, as well as an upward revision for June, added further pressure on rate hike bets as investors factored-in the potential for higher wages, needed to tempt Americans back into the workforce, to continue to stoke inflation.
The CME Group's FedWatch is now indicating a 72.5% chance of a 75 basis point rate hike next month in Washington, adding to the hawkish rhetoric from Fed Chair Jerome Powell last week in Jackson Hole.
U.S. consumer confidence also rose sharply in August, according to the Conference Board's closely-tracked survey, amid an improving jobs market and falling gas prices.
The contrast with growth prospects in other economies, particularly China, is also adding upward momentum to the dollar, which lost 0.3% in early New York trading against a basket of its global peers to change hands at 108.74.
Benchmark 10-year Treasury note yields, meanwhile, were pegged at 3.179%.
Economic activity in China, in fact, slowed notably this month, according to official PMI published Wednesday, as both Beijing's Covid lockdown rules, as well as some of the hottest weather on record, pushed the country's manufacturing sector into contraction.
The data pulled China stocks into the red again Tuesday, while the Nikkei 225 fell 0.52% in Tokyo following last night's sell-off on Wall Street.
In Europe, stocks were marked 0.68% lower in Frankfurt following a record high reading for August inflation, and a big jump in rate hike expectations from the European Central Bank, which meets on September 8 in Frankfurt.
Europe's headline inflation rate was estimated at 9.1% for the month of August, topping analysts' forecasts of a 9% reading and accelerating firmly past the 8.9% tally recorded in July for the 19 countries that share the single currency.
Stripping away food, energy, alcohol and tobacco prices, so-called core inflation was pegged at 4.3%, another all-time high.
On Wall Street, the S&P 500 finished down 0.78%, while the Dow Jones Industrial Average fell 280 points, 0.88%, to 31,510. The tech-focused Nasdaq lost 0.56%.
The payroll processing group ADP said in its National Employment Report that private sector jobs grew by 132,000 last month, well shy of Wall Street forecasts of a 288,000 gain, using a new methodology that ADP says will provide a "more robust, high-frequency view of the labor market and trajectory of economic growth."
In other markets, U.S. gasoline futures slumped back to levels last seen prior to Russia's invasion of Ukraine in overnight trading Wednesday, setting up further pump price declines heading into the Labor Day weekend.
Gasoline futures for September delivery were marked 6 cents lower in European trading at $2.633 per gallon after settling last night at $2.6944, the lowest since February 18.
Weak manufacturing data from China, the world's biggest energy importer, is also pressuring global crude prices, with WTI futures for October marked $1.00 lower at $90.58 per barrel.
In terms of individual stocks, HP (HPQ) shares fell 7.8% after the PC and peripherals maker posted weaker-than-expected second quarter earnings and a disappointing near-term profit outlook.
Snap Inc (SNAP) shares gained 8.6% after the messaging app maker lost two of its key ad executives to streaming giant Netflix while confirming reports that it plans to eliminate more than 1,200 jobs.
Bed, Bath & Beyond (BBBY) shares tumbled 21.3% as the struggling home goods retailer filed for permission to sell more shares as part of a capital raising plan while unveiling details of its much-anticipated turnaround plans.
