NEW YORK: US stocks ended down on Wednesday (Dec 6), pulled lower by megacaps and energy shares as signs of a cooling jobs market reinforced expectations that the Federal Reserve could start cutting interest rates early next year.

On Wall Street, the S&P 500 dipped, giving up earlier gains, as a steep drop in energy stocks outweighed gains in utilities and industrials stocks.

The Dow Jones Industrial Average fell 70.13 points, or 0.19%, to 36,054.43, the S&P 500 lost 17.84 points, or 0.39 %, to 4,549.34 and the Nasdaq Composite lost 83.20 points, or 0.58 %, to 14,146.71.

The ADP National Employment report showed private payrolls increased by 103,000 jobs in November, below economists' expectation of 130,000. That provided fresh evidence of labor market weakness, a day after news of a drop in October job openings.

The latest employment data reinforced expectations the Fed’s rate hike campaign is cooling the economy.

“Right now, it’s consistent with the overall trajectory of softening job growth, and so far that’s not problematic because the economy is still humming along,” said Bill Merz, head of capital markets research at US Bank Wealth Management in Minneapolis.

“What would be concerning is if that trend persists for too long, and it turns into large job losses.”

Declines in energy stocks weighed on the major indices, with oil prices dropping 4% as a larger-than-expected rise in US petrol inventories exacerbated worries about fuel demand.

Nvidia fell 2.3%, while Microsoft and Amazon each lost more than 1%.

While the S&P 500 ended lower, advancing issues in the index outnumbered decliners by a 1.3-to-one ratio.

On Friday, the more comprehensive non-farm payrolls report for November will offer greater clarity on the state of the labour market.

Investors widely expect the Fed to hold rates steady at its meeting next week and potentially start cutting rates in March. A slim majority of economists in a Reuters poll said they believe the Fed will leave rates unchanged at least until July, later than earlier thought.

Optimism about rate cuts helped push the S&P 500 up nearly 9% in November, and the benchmark is now down about 9% below its record high close in December 2021.

Plug Power fell 5.9% after Morgan Stanley downgraded the hydrogen fuel cell firm to “underweight” from “equal weight”.

Tobacco giants Altria Group and Philip Morris International slipped 2.8% and 1.6%, respectively, after UK peer British American Tobacco said it will take a US$31.5 billion hit from writing down the value of some US cigarette brands.

Campbell Soup rallied 7.1% after the food seller beat quarterly profit expectations, helped by higher prices for its packaged meals and snacks. – Reuters

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