US stocks fall as Fed official talks tough on inflation

Traders work on the floor of the New York Stock Exchange, during morning trading, on Jan 19, 2023. PHOTO: AFP

NEW YORK - Wall Street stocks fell again Thursday amid lingering worries over a recession as a top Federal Reserve official pledged a tough line on inflation.

Major US indices were in the red the entire session after losing more than 1 per cent on Wednesday, following lacklustre retail sales data that underscored the risk of a downturn in the world’s biggest economy.

Data showing lower-than-expected jobless claims indicated that “despite all the big-tech post-pandemic layoffs, the jobs market remains hot,” said OANDA’s Edward Moya.

“The labour market needs to break to allow the Fed to comfortably keep rates on hold,” he added.

The Dow Jones Industrial Average finished down 0.8 per cent at 33,044.56.

The broad-based S&P 500 shed 0.8 per cent to 3,898.85, while the tech-rich Nasdaq Composite Index dropped 1 per cent to 10,852.27.

The declines came as the yield on the 10-year US Treasury note pushed higher, underscoring worries that the Fed may not be close to pivoting from its tough stance on inflation.

Fed vice-chairman Lael Brainard vowed to “stay the course” on Thursday, according to prepared remarks for an event in Chicago.

“Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time,” she said.

In the past year, the Fed has raised the benchmark lending rate rapidly from around zero to 4.25-4.50 per cent.

Ms Brainard’s latest remarks suggest rates will have to stay high for a while.

While markets were broadly lower, petroleum-linked shares advanced as oil prices closed at their highest level since early December.

US giants Chevron gained 1 per cent and ConocoPhillips won 0.9 per cent. AFP

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