Nasdaq, S&P 500, Dow Jones selloff picks up as rates pop on strong data

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The good-news-is-bad-news trade continues in the stock market Thursday. The major averages are sliding following more economic numbers that boost the case for Fed hawks.

The Nasdaq Composite (COMP.IND) -2% is the weakest. Semiconductor stocks are slumping after the U.S. prohibited Nvidia from selling some of its products to China.

Also lower are the S&P 500 (SP500) -1.2% and the Dow (DJI) -0.7%.

Eight of 11 S&P sectors are lower, with Energy and Info Tech at the bottom. The winners are all defensive: Utilities followed by Healthcare and Staples.

Rates shot up following the economic data that showed strength on the manufacturing and jobs fronts.

The 10-year Treasury yield (US10Y) is up 14 basis points to 3.27% and the 2-year Treasury yield (US2Y) is up 8 basis points to 3.53%.

Weekly jobless claims fell by 5K to 232K compared to the forecasted 246K number that economists expected.

“Claims remain extremely low by historical standards, which makes perfect sense given that job openings remain near record levels. If you’re still determined to find a U.S. recession, you’re going to have to look somewhere else,” Pantheon Macro’s Ian Shepherdson said.

August ISM manufacturing index data came in slightly higher than anticipated at 52.8 compared to the forecasted 52 figure. The employment component came in at 54.2, topping the consensus of 48.

“The underlying details could be seen as supportive of the elusive soft-landing that monetary policymakers would still like to see happen with most components signaling slower growth rather than outright contraction and critically the prices paid component shed 7.5 points to fall to 52.5; the lowest print for this component also since June 2020,” Wells Fargo said.

Among active stocks, while Staples are doing well overall, Hormel is among the weakest in the S&P on guidance and Campbell Soup is down after warning on inflation pressures.