Wall Street finished lower on Wednesday after a preliminary job report indicated that the U.S. job market remained resilient after more than a year of monetary tightening by the Federal Reserve.
The Dow Jones closed the trading session at 32,908.27, losing 134.51 points or 0.41 percent. The S&P 500, which measures the performance of the top 500 American firms, lost 25.69 points or 0.61 percent to 4,179.83. Meanwhile, the Nasdaq Composite declined by 82.14 points or 0.63 percent to conclude the session at 12,935.28.
Shares of Hewlett Packard Enterprise plummeted more than seven percent after the IT company reported that it missed revenue estimates for the second quarter and adjusted down its full-year sales guidance.
Analysts said the rally in artificial intelligence-related stocks, which boosted the Nasdaq on Tuesday, had begun to lose momentum. C3.ai stock sank more than eight percent, while ChargePoint Holdings traded flat.
SoFi Technologies jumped 15.09 percent to $6.94 after the top American lawmakers came into an agreement regarding the debt ceiling crisis. Analysts explained that the bill supported government student loan repayments, which is advantageous for the personal finance firm.
Intel stock also added 4.83 percent to $31.44 after the chip producer said the second quarter revenue is on track to post the higher end of its guidance.
The U.S. Department of Labor reported that job openings rose to more than 10.1 million in April, up from an earlier estimate of 9.4 million. According to data, there were 1.8 openings for every unemployed person in the U.S., well above the standard of 1.0 to 1.2. The report also showed that layoffs went down significantly last month compared to March.
The stronger-than-anticipated job report increases the market's expectations for further monetary tightening by the U.S. central bank, say analysts. Since starting its rate hike campaign in March last year, the Fed has raised concerns regarding the robust U.S. job market. A strong labor market can drive up wages, complicating the Fed's effort to bring down inflation to the two percent target.
"This is not what the Fed was hoping to see," said BMO Capital Markets senior economist Priscilla Thiagamoorthy.
Fed governor Philip Jefferson hinted Wednesday that a rate hike pause is possible in the next policy meeting but will likely not end the central bank's tightening cycle. Fed Philadelphia Fed President Patrick Harker also said the central bank should "skip, not pause" the rate hike at the meeting.
"I am in the camp increasingly coming into this meeting thinking that we really should skip."
Patrick Harker, Philadelphia Federal Reserve president
Fed fund futures now project an over 30 percent chance of a 25-basis-point rate hike on June 14, lower than the earlier forecast of more than 60 percent.
Stock market may rally
According to analysts, the U.S. equity market will likely see a rally after the debt ceiling crisis has been fully averted. The assurance that the U.S. can avoid default will increase risk appetite in financial markets.
The debt ceiling agreement, negotiated by President Joe Biden and Rep. Kevin McCarthy, passed the House of Representatives on Wednesday evening, with 314 representatives voting in favor of the bill.
After the vote, Biden released a statement, saying that the House had taken a "critical step" to prevent the first-ever default for the country. He urged the Senate to pass the bill "as quickly as possible."
The Treasury Department previously cautioned lawmakers that the U.S. could fail to meet its payment obligations as soon as early June if the debt ceiling deal did not pass on time. Analysts say the impact of a U.S. default will be "catastrophic" for the global economy.