Dow sinks and broader stock market skids lower after record job openings, as 10-year yield tests 1.3%

The S&P 500 and Nasdaq Composite pulled back from intraday records Wednesday morning and the Dow industrials were under pressure as investors reacted to a record-setting job openings report, ahead of an account of the rate-setting Federal Open Market Committee’s mid-June gathering.

Investors are searching for further insights about the economic recovery from COVID.

What are major indexes doing?
  • The Dow Jones Industrial Average
    DJIA,
    0.30%

    fell 117 points, or 0.3%, to 34,464.

  • The S&P 500
    SPX,
    0.19%

    lost 9 points, or 0.2%, at 4,336, after touching an intraday record high at 4,357.25.

  • The Nasdaq Composite Index
    COMP,
    -0.25%

    shed 61 points, or 0.4%, to 14,602, after establishing a fresh intraday record early in the session at 14,755.33.

On Tuesday, the Dow fell 208.98 points, or 0.6%, to close at 34,577.37. The S&P 500 ended the day down 0.2%, snapping a string of seven consecutive record closes — the longest such run since an eight-day streak ended in 1997. The Nasdaq Composite edged up 0.2% for its 21st record finish of 2021.

What’s driving the market?

A Labor Department report showed job openings in the U.S. rose to a record 9.21 million in May, reflecting an insatiable demand for labor as the economy fully reopens and businesses scramble to keep up with soaring sales for their goods and service.

The report on job availability has set a record for three straight months and may be starting to shake the confidence of investors anticipating a robust economic bounceback from the COVID-19 pandemic.

Those concerns have been reflected, at least partly, in a recent slump in longer-dated bond yields, which comes ahead of the publication of minutes of the Fed’s last policy meeting due at 2 p.m. Eastern.

The decline in Treasury yields, with the 10-year Treasury note
TMUBMUSD10Y,
1.328%

falling to the lowest since February at a rate below 1.3%, had emboldened buyers in yield-sensitive segments of the market, like the technology-heavy Nasdaq Composite and growth stocks, but markets may be growing more concerned that buyingin government bonds implies that some investors harbor doubts about the stock market’s ability to deliver further record rallies.

“Hiring is still a problem though as they fell by 85k in May and after a sharp jump in the two prior months of 609,000, the number of quitters fell by 388,000, wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group, in a daily note.

“Bottom line, we’ll of course see how these numbers mesh in coming months as kids go back to school, enhanced unemployment benefits expire and the vaccine gets further rolled out, but of course at a sharply slowing pace,” he said.

At its June 15-16th meeting, policy makers moved up their forecasts for a policy interest rate increase and began talking about when it would be appropriate to discuss the unwinding of its asset purchases of $120 billion a month, which should be a drag on Treasury rates.

Investors have heard from virtually every Fed official since the meeting, leaving the market with a good sense of where the central bank stands, some analysts have said. The Fed has signaled that it wants to see more good monthly employment reports before scaling back purchases of $120 billion a month in Treasurys and mortgage-backed securities and raising interest rates, which currently stand at a range between 0% and 0.25%.

“This was the meeting when the Fed shocked markets by signaling it might take its foot off the accelerator soon, so traders will be looking for clues as to what kind of progress the committee wants to see before taking the next normalization step,” said Marios Hadjikyriacos, investment analyst at XM, in a note.

Read: June jobs report bolsters case for Fed to start slowing down bond-buys this year

Bank shares, meanwhile, including Goldman Sachs
GS,
-0.32%

and JPMorgan Chase
JPM,
0.51%

retreated amid the rate retreat, potentially hurting the financial sector’s profitability.

Separately, crude-oil futures
CL.1,
-2.45%

pivoted to a sharp decline from a modest gain in the wake of a disagreement within the Organization of the Petroleum Exporting Countries and their allies — a group known as OPEC — on raising output. WTI crude touched a six-year high briefly on Tuesday before retreating. 

See:What the OPEC standoff means for oil prices and financial markets

Investors were also wary of Chinese technology companies listed on U.S. markets as Beijing tightens its control over the country’s largest tech companies. Didi Global Inc.
DIDI,
-6.72%

was down more than 4% early Wednesday, after tumbling 19.6% on Tuesday in the wake of last week’s New York IPO.

Which companies are in focus?
  • Planet Labs Inc. is set to go public through a merger agreement with special-purpose acquisition company, or SPAC, dMY Technology Group Inc. IV 
    DMYQ.UT,
    2.53%

     in a deal that values Planet at about $2.8 billion. 

  • Shares of Coinbase Global Inc. COIN fell 0.9% Wednesday, after Oppenheimer analyst Owen Lau said he was a little more bullish on the cryptocurrency trading platform, citing expectations of strong second-quarter results.

  • Chobani announced Wednesday that it has filed a confidential draft registration statement for a proposed initial public offering with the Securities and Exchange Commission. 

  • Shares of Moderna IncMRNA were down 5% Wednesday after the company said it began dosing patients in a Phase 1/2 clinical trial evaluating an experimental seasonal flu vaccine. 

  • Shares of Biohaven Pharmaceutical Holding Co. LtdBHVN were up 13% Wednesday after the company said its new migraine treatment brought in $93 million in sales in the second quarter of 2021.

How are other assets trading
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose 0.3%.

  • The U.S. oil benchmark CL00 turned sharply lower, down 2.6% at $71.43 a barrel on the New York Mercantile Exchange Gold futures GC00 rose 0.6% to $1,805.90 an ounce.

  • European equities traded higher, with London’s FTSE 100 UKX up 0.6% and the Stoxx Europe 600 index SXXP gaining 0.8%.

  • In Asia, the Shanghai Composite SHCOMP rose 0.7%, while Hong Kong’s Hang Seng Index HSI fell 0.4% and Japan’s Nikkei 225 NIK lost 1% on the session.