Wall Street’s major averages closed lower on Thursday with Nasdaq’s 2 percent drop leading losses as investors worried that data showing a resilient economy would lead the U.S. Federal Reserve to keep hiking interest rates for longer than feared.
Meanwhile, the Labor Department said filings for state unemployment benefits rose to 216,000 last week but were below economist estimates for 222,000.
“Today’s data, in my mind, kind of confirmed this is the direction we’re heading,” said Stucky, adding that high inflation, a bad economy and tight job market should lead investors “to come to grips with reality that earnings estimates are too high” for 2023. “Strong economic data, especially strong labor market data, keeps the Fed’s foot on the economic brake,” said Liz Ann Sonders, chief investment strategist at Charles Schwab who would prefer to see economic weakness hit “sooner rather than later because then it gives the Fed the ability to pause.”“You increase the risk of an overshoot if they continue to be aggressive because then the hit is bigger,” she said.
CarMax Inc sank 3.7 percent after the used-vehicles retailer paused share buybacks after an 86-percent quarterly profit plunge.
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