Skip to main content

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, which helped to limit losses on the TSX.

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.

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 FedWatch tool.

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

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.

The Toronto Stock Exchange’s S&P/TSX composite index ended down 60.67 points, or 0.3%, at 22,051.79, giving back some earlier gains that had lifted the index to a new record high of 22,239.05.

U.S. crude oil futures settled 1.4% higher at US$86.59 a barrel due in part to geopolitical tensions, with Israel bracing for the possibility of a retaliatory attack after its suspected killing of Iranian generals in Damascus this week.

The Toronto market’s technology sector fell 1.2%, while consumer staples was also a drag, falling 1.3%.

The materials group, which includes metal miners and fertilizer companies, gave back some recent gains, ending 0.7% lower.

In contrast, the consumer discretionary sector climbed 1.4%. It was helped by a gain of 10% for the shares of Dollarama Inc after the discount store operator forecast annual and quarterly sales above estimates.

Reuters, Globe staff

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe