ASX set to fall as Wall Street retreats

By Damian Troise and Alex Veiga

Stocks fell in afternoon trading on Wall Street on Thursday as the broader market continued pulling back from a surge earlier in the week.

The S&P 500 is 0.5 per cent lower in mid-afternoon trade. The benchmark index is still on track for a 5 per cent gain this week following its best two-day rally since the spring of 2020.

Wall Street has retreated on Thursday.
Wall Street has retreated on Thursday. Credit:AP

The Dow Jones has lost 0.9 per cent and the Nasdaq is down 0.3 per cent. The Australian sharemarket is set to lose ground, with futures at 4.55am AEDT pointing to a fall of 35 points or 0.5 per cent, at the open. The ASX closed flat on Thursday.

Treasury yields gained ground and put more pressure on stocks. The yield on the 10-year Treasury, which helps set rates for mortgages and many other kinds of loans, rose to 3.80 per cent from 3.75 per cent late Wednesday. The yield on the two-year Treasury, which more closely tracks expectations for Federal Reserve action, rose to 4.20 per cent from 4.14 per cent late Monday.

Financial and health care stocks were among the biggest weights on the market. Citigroup fell 1.6 per cent and Johnson & Johnson fell 1.4 per cent.

Energy stocks mostly rose as crude oil prices edged higher. Marathon Oil gained 3.5 per cent.

Investors were reviewing the latest data on the jobs market. More Americans filed for unemployment benefits last week, the largest number in four months, according to the US government. But the labour market remains strong in the face of persistent inflation and a slowing overall US economy.

Wall Street is watching employment data very closely as the Fed remains determined to raise interest rates to try and tame the hottest inflation in four decades. Investors are concerned that the Fed could go too far with its rate increases and push the economy into a recession.


The job market has been a particularly strong area of an otherwise slowing economy. Any sign that it’s weakening could factor into the Fed’s future decisions to either remain aggressive or ease up. Government employment data released on Tuesday indicated that the job market may be cooling. A more closely watched monthly employment report, for September, will be released on Friday.

Wall Street analysts expect the government to report that the U.S. economy added 250,000 jobs last month, well below the average of 487,000 a month over the past year, but still a strong number that suggests the labor market is healthy despite chronic inflation and two straight quarters of US economic contraction.

More broadly, the global economy has also been hit hard by record inflation and lingering uncertainty over Russia’s invasion of Ukraine. That conflict continues to hang over energy costs worldwide, but especially for Europe. The International Monetary Fund is once again lowering its projections for global economic growth in 2023 and said the risks of a recession are rising.

Investors will soon get more information on just how hard inflation is squeezing businesses and consumers when companies start reporting their third-quarter financial results this month. More importantly, Wall Street will be listening closely to what executives say about expectations for the remainder of the year and into 2023.

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