US STOCKS-Wall Street drops as jobs data rekindles rate hike fear

Reuters

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    * Nonfarm payrolls beat expectations in July
    * Lyft surges as record earnings overshadow cautious outlook
    * Indexes down: S&P 500 -0.40%, Nasdaq -0.76%, Dow +0.01%

 (Updates with details of afternoon trading)
    By Devik Jain and Noel Randewich
    Aug 5 (Reuters) - Wall Street stocks fell on Friday, weighed
down by Tesla and other technology-related stocks after a solid
jobs report torpedoed recent optimism that the Federal Reserve
might let up its aggressive campaign to reign in decades-high
inflation.
    Data showed U.S. employers hired far more workers than
expected in July, the 19th straight month of payrolls expansion,
with the unemployment rate falling to a pre-pandemic low of
3.5%.  urn:newsml:reuters.com:*:nL1N2ZG2G3 
    The report added to recent data painting an upbeat picture
of the world's largest economy after it contracted in the first
half of the year. That deflated investors' expectations that the
Fed might let up in its series of rate hikes aimed at cooling
the economy.
    "This is all about the Fed. A very strong jobs report like
we had puts pressure on the Fed to tighten for longer," said
Adam Sarhan, chief executive of 50 Park Investments. "The market
is scared the Fed is going to overshoot again. If they tighten
too sharply and too long, that's going to cause a hard landing,
a deep recession."
    Tesla  TSLA.O  tumbled 6% and weighed heavily on the S&P 500
and Nasdaq. Facebook-owner Meta Platforms  META.O  lost 2.5% and
Amazon  AMZN.O  declined 1.6%.
    U.S. Treasury yields climbed as odds increased of a
75-basis-point interest rate hike in September. That helped bank
stocks, with JPMorgan  JPM.N  rallying about 3%.
    Of the 11 S&P 500 sector indexes, eight declined, led lower
by consumer discretionary  .SPLRCD , down 1.93%, followed by a
1.13% loss in communication services  .SPLRCL .
    Focus now shifts to inflation data due next week, with U.S.
annual consumer prices expected to jump by 8.7% in July after a
9.1% rise in June.
    Several policymakers have this week stuck to an aggressive
policy tightening stance until they see strong and long-lasting
evidence that inflation was trending toward the Fed's 2% goal.
    Surging inflation, the war in Ukraine, Europe's energy
crisis and COVID-19 flare-ups in China have rattled investors
this year.
    A largely upbeat second-quarter earnings season has helped
the S&P 500 bounce back by about 13% from its mid-June lows
after a rough first-half performance.
    In afternoon trading, the S&P 500 was down 0.40% at 4,135.24
points.
    The Nasdaq declined 0.76% to 12,623.40 points, while the Dow
Jones Industrial Average was up 0.01% at 32,729.03 points.
    Lyft Inc  LYFT.O  surged almost 16% after the ride-hailing
firm forecast an adjusted operating profit of $1 billion for
2024 after posting record quarterly earnings.  urn:newsml:reuters.com:*:nL4N2ZG4DG
    Across the U.S. stock market  .AD.US , declining stocks
outnumbered rising ones by a 1.3-to-1 ratio.
    The S&P 500 posted four new highs and 30 new lows; the
Nasdaq recorded 54 new highs and 36 new lows.

 (Reporting by Devik Jain, Aniruddha Ghosh and Medha Singh in
Bengaluru, and by Noel Randewich in Oakland, Calif.; Editing by
Anil D'Silva, Aditya Soni and Cynthia Osterman)
 ((noel.randewich@tr.com; Twitter: @randewich))

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