NASDAQ Down Sharply for Third Day on Rate Hike Worries

The tech-heavy NASDAQ Composite Index is down for a third straight session on Tuesday, hitting its lowest level since July 27 as a rise in job openings may have just given the Federal Reserve the greenlight to raise interest rates aggressively over the near-term in order to fight high inflation.

The index has plummeted about 7.36% since Federal Reserve Chair Jerome Powell on Friday reaffirmed the central bank’s determination to raise interest rates even in the face of a slowing economy.

At 18:00 GMT, the NASDAQ Composite is at 11823.97, down 193.69 or -1.61%. The Invesco QQQ Trust ETF (QQQ) is at $299.68, down $4.73 or -1.55%.

Hawkish comments from a Fed official also weighed on sentiment. The latest remarks came from New York Fed President John Williams on Tuesday. “I do think with demand far exceeding supply, we do need to get real interest rates…above zero. We need to have somewhat restrictive policy to slow demand, and we’re not there yet,” Williams told the Wall Street Journal.  “We’re still quite a ways from that,’ he added.

Higher Treasury yields also weighed on demand for higher risk assets. Short-term rates continued their march higher as investors bet on more rate hikes. The 2-year Treasury yield topped its highest level in nearly 15 years.

US Labor Market Defies Interest Rate Hikes as Job Openings Rise High in July

U.S. job openings increased in July and data for the prior month was revised sharply higher, pointing to persistently strong demand for labor that is giving the Federal Reserve cover to maintain its aggressive interest rate increases, Reuters reported.

The Labor Department’s Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday, showed there were two jobs for every unemployed person last month, pointing to extremely tight labor market conditions. It suggested that fears the economy was in recession after two straight quarterly declines in gross domestic product were greatly exaggerated.

Consumer Confidence Rebounds

In other news, the Conference Board’s overall consumer confidence index rebounded to 103.2 this month from 95.3 in July, ending three straight monthly declines. Economists had forecast the index would climb to 97.7. Consumers’ inflation expectations over the next 12 months fell to 7.0% from 7.4% in July, Reuters reported.

Every Stock in the NASDAQ 100 Index is Lower

The selling on Tuesday is being felt across the board with all subsectors under pressure and every stock in the NASDAQ 100 Index lower for the session.

The losers were led by Baidu Inc, down 6.89%, followed by Lucid Group Inc, off by 6.40% and AstraZeneca PLC lower by 3.39%. CSX Corp is down 2.99%, followed by Tesla Inc which is off by 2.90%.