Wall Street ends sharply lower ahead of jobs report; investors digest Fed comments By Reuters

By Caroline Valetkevitch

NEW YORK (Reuters) -U.S. stocks ended sharply lower on Thursday as Federal Reserve officials took a cautious approach in comments on the outlook for interest rate cuts, while investors braced for Friday’s key U.S. monthly jobs report.

Investors also weighed comments by U.S. President Joe Biden, who called for an immediate ceasefire in a call with Israel Prime Minister Benjamin Netanyahu over the Gaza war. Oil prices climbed on the geopolitical tensions.

Among the comments by Fed officials, Minneapolis Fed Bank President Neel Kashkari said that at the U.S. central bank’s meeting last month he penciled in two rate cuts this year but that if inflation continues to stall, none may be required this year.

Earlier on Thursday, Richmond Fed President Thomas Barkin said the U.S. central bank has “time for the clouds to clear” on inflation before starting to cut rates.

“It’s a very careful, measured approach,” said Paul Nolte, senior wealth adviser and market strategist for Murphy & Sylvest in Elmhurst, Illinois.

In addition, he said, “there’s some nervousness coming into that (jobs) report – that maybe I don’t want to be as bullish coming in.”

Stocks were higher earlier in the day following U.S. jobless claims data that helped to underpin rate-cut hopes.

The data showed the number of Americans filing new claims for unemployment benefits increased more than expected last week.

Friday’s monthly U.S. jobs report could hold more clues on the labor market and inflation.

According to preliminary data, the S&P 500 lost 64.03 points, or 1.23%, to end at 5,147.46 points, while the Nasdaq Composite lost 228.38 points, or 1.40%, to 16,049.08. The Dow Jones Industrial Average fell 538.44 points, or 1.38%, to 38,588.70.

Economists polled by Reuters expect the nonfarm payrolls for March due on Friday to fall to 200,000 from 275,000 in February, while the unemployment rate will likely remain steady at 3.9%.

Money markets still currently expect a near 60% chance of at least a 25 basis-point rate cut in June, according to the CME Group’s (NASDAQ:) FedWatch tool.

On the plus side, Levi Strauss (NYSE:) shares jumped after the apparel maker raised its annual profit forecast, citing savings from its recent cost-cutting measures and fewer discounts.