U.S. stocks sank Thursday morning after economic data showed private payrolls rose more than expected last month and weekly jobless claims fell to a three-month low, pointing to continued tightness in the labor market despite higher interest rates.
The S&P 500 (^GSPC) plopped 0.7%, while the Dow Jones Industrial Average (^DJI) shed 250 points or 0.8%. The technology-heavy Nasdaq Composite (^IXIC) tumbled 0.9%.
The ADP National Employment Report showed private employment grew by 235,000 jobs in December. Economists surveyed by Bloomberg called for an increase of 150,000.
Even as the Federal Reserve presses on with aggressive monetary tightening to rein in inflation, ADP’s data and weekly jobless claims follow a separate measure Wednesday that found job openings fell less than expected last month and remained high. The Labor Department’s monthly nonfarm payrolls survey due out Friday morning remains the most important reading for Fed officials and investors attempting to predict the next policy move.
Amazon (AMZN) CEO Andy Jassy said in a note late Wednesday the company’s planned job cuts will now impact at least 18,000 employees, significantly more than previously indicated. Jassy’s memo came after the Wall Street Journal reported the news. Shares ticked lower at the start of trading Thursday.
The figure marks the highest workforce reduction by a tech company in recent months as a growing number of names in the sector lay off workers to cut costs amid more challenging market conditions. Amazon lost roughly $834 billion in market value in 2022.
Shares of crypto-focused Silvergate Capital (SI) cratered 38% at the open after The Wall Street Journal reported Thursday the bank was forced to sell assets at a sizable loss to cover $8.1 billion in withdrawals following the bankruptcy of FTX. The plunge comes after the stock rallied 27% Wednesday.
In other crypto stock moves, Coinbase (COIN) shares fell 10% following a downgrade from Cowen to Market Perform from Outperform, citing a “fairly consistent drawdown” in trading volumes and risk from probable regulatory enforcement action after the collapse of FTX.
“There is low visibility per stabilization in retail trading volumes in 2023 following further December deterioration,” the firm said. “Potential SEC enforcement action is elevated post-FTX with regulatory certainty unlikely until 2024.”
Johnson & Johnson’s (JNJ) consumer health business Kenvue on Wednesday filed to be listed as a separate company, marking the first notable filing of a U.S. initial public offering of the new year.
In other markets, oil prices resumed declines after plunging nearly 10% over the past two days. West Texas Intermediate (WTI) crude futures, the U.S. benchmark, fell to $72 per barrel.
Stocks closed higher on Wednesday following a volatile session swayed by a readout of minutes from the Federal Reserve’s December meeting and economic data that showed higher-than-expected job openings and a dropoff in manufacturing activity for a second-straight month.