By Sam Boughedda
Investing.com -- Stocks tumbled Wednesday afternoon after the Federal Reserve signaled it might be more aggressive in combating inflationary pressures with rate hikes as it eases off its stimulus.
Already investors were expecting rate hikes as early as March, pushing Treasury yields higher this week. Wednesday’s private payrolls report, which comes a couple of days before the government’s monthly employment report, showed companies added 807,000 jobs last month. That was more than twice the number that economists had forecast.
Tech stocks slumped because rising inflation tends to dampen the prospects for growth companies, but the broader index also fell as did blue chip stocks.
Thursday brings the weekly jobless claims for the previous week, another gauge used by investors to measure progress in the recovery.
Here are three things that could affect markets tomorrow:
1. Fed outlook
After their meeting last month, Federal Reserve officials called the labor market “very tight" and signaled it may need to raise interest rates sooner than they might have earlier last year.
"It may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated. Some participants also noted that it could be appropriate to begin to reduce the size of the Federal Reserve’s balance sheet relatively soon after beginning to raise the federal funds rate," the minutes said.
2. Oil market
Oil rose for a third-straight day after unexpectedly large builds in fuel stockpiles.
While crude stockpiles fell by 2.114 million barrels last week, the Energy Information Administration, or EIA, said on Wednesday. Analysts tracked by Investing.com had expected a draw of 3.283 million barrels instead.
Gasoline stocks jumped by 10.128 million barrels last week, the EIA said, compared with expectations for a rise of 1.775 million. Historical EIA showed that to be the largest weekly surge in gasoline stocks since April 2020, during the height of the coronavirus crisis.
3. Chinese stocks
ADRs and stocks of Chinese companies traded weaker as China's cyber regulatory body issued draft rules Wednesday that, if implemented, will mean a heavier compliance burden for apps whose functions are perceived as influencing public opinion.
In an unrelated development, but one which still reflects the tightening of oversight of China’s internet giants, the country’s markets regulator fined units of Alibaba Group Holdings Ltd ADR (NYSE:BABA), Tencent Holdings Ltd ADR (OTC:TCEHY), and Bilibili Inc (NASDAQ:BILI) for failing to properly report about a dozen deals.
–Investing.com staff and Bloomberg contributed to this report