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* ISM service sector data beats estimates
* Bed Bath & Beyond shares sink after death of CFO
* Wall St emerges from three straight weeks of decline
* Dow down 0.55%, S&P 500 down 0.41%, Nasdaq down 0.74% (market close updates)
By Caroline Mandl
NEW YORK, Sept 6 (Reuters) – Wall Street’s major indexes closed lower on Tuesday, the first session after the Labor Day and summer holidays in the United States, as traders weighed the news economic data in volatile exchanges.
A survey by the Institute for Supply Management (ISM) showed the U.S. services industry rebounded in August for the second consecutive month amid stronger order growth and employment, while bottlenecks supply bottlenecks and price pressures have eased.
However, figures from S&P Global showed that the services sector PMI fell short of preliminary estimates for August.
A stronger-than-expected reading on the U.S. services sector fueled expectations that the Federal Reserve will continue to raise interest rates to keep inflation under control.
“The Fed has relegated us to being very data dependent, so every bit of information that comes out, investors are going to not only be looking at the absolute level, but trying to deduce what that means for the Fed meeting,” he said. Carol Schleif, Assistant Director of Investments at BMO Family Office.
“One of the things that confuses investors is that there really isn’t much to propel the markets up or down,” she added.
Concerns about Europe’s energy supply and the impact of COVID-19 lockdowns on China’s economy also dragged markets lower on Tuesday, said Shawn Cruz, chief business strategist at TD Ameritrade. “Much of the uncertainty and volatility is not coming from the United States; it is actually coming from abroad.”
The tech-heavy Nasdaq suffered its seventh consecutive day of losses, its longest losing streak since November 2016.
Rate-sensitive stocks of Amazon.com Inc and Microsoft Corp fell about 1% as benchmark U.S. Treasury yields hit their highest levels since June. Apple Inc, which will launch new iPhones next Wednesday, lost 0.8.
Traders see a 74% chance of a third consecutive 75 basis point rate hike at the Fed’s policy meeting later this month, according to CME’s FedWatch tool https://www.cmegroup. com/trading/interest-rates/countdown-to -fomc.html?redirect=/trading/interest-rates/fed-funds.html.
The focus will be on Fed Chairman Jerome Powell’s speech on Thursday, as well as US consumer prices next week for clues on the path of monetary policy.
Markets started September on a weak note, extending a decline that began in late August, as hawkish comments from Fed policymakers and data signaling US economic momentum raised fears of aggressive interest rate hikes.
The S&P is down nearly 18% year-to-date, while the Nasdaq has lost more than 26% as rising interest rates hurt megacap technology and growth stocks.
Among the major S&P sectors, energy and communication services were the worst performers, while defensive utilities and real estate gained.
The Dow Jones Industrial Average fell 173.14 points, or 0.55%, to 31,145.3; the S&P 500 fell 16.07 points, or 0.41%, to 3,908.19; and the Nasdaq Composite lost 85.96 points, or 0.74%, to 11,544.91.
The CBOE Volatility Index, known as Wall Street’s Fear Gauge, hit a near two-month high of 27.80 before closing at 26.91.
Bed Bath & Beyond Inc fell 18.4% after CFO Gustavo Arnal fell to his death from New York’s Tribeca skyscraper.
Digital World Acquisition Corp fell 11.4% after Reuters reported the blank check acquisition company that agreed to merge with former US President Donald Trump’s social media company was unsuccessful obtain sufficient shareholder support for an extension to complete the agreement.
Volume on U.S. exchanges was 10.71 billion shares, compared to an average of 10.46 billion for the full session over the past 20 trading days.
Falling issues outnumbered advances on the NYSE by a ratio of 2.46 to 1; on the Nasdaq, a 2.12-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 29 new lows; the Nasdaq Composite recorded 19 new highs and 317 new lows. (Reporting by Carolina Mandl, in New York, and additional reporting by Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Saumyadeb Chakrabarty, Maju Samuel and Richard Chang)