STORY: U.S. stocks dropped on Wednesday. Unexpectedly strong data on the labor market raised concerns the Federal Reserve may have to continue hiking interest rates.
The Dow fell four-tenths of one percent, the S&P 500 dropped six tenths as did the Nasdaq.
The Labor Department released data indicating U.S. job openings unexpectedly rose in April according to the so-called JOLTS report, pointing to resilience in the labor market that suggests pressure on both wages and inflation.
Baird Managing Director and Market Strategist Michael Antonelli said the economy could actually be strengthening.
"This is what the Federal Reserve is grappling with is the economy actually hot? Is the economy actually accelerating and not declining? Where is this push and pull in the markets of recession? If job openings accelerate, that means the economy is actually probably accelerating and not receding. So jolts going up definitely puts a question mark over my head, which is is economic data actually getting better and if it's getting better, does that put the Federal Reserve back on hike duty, right? Does that put them back on ‘wow, we may actually need to consider another hike’. So that's really what's important now, especially for, you know, not only retail investors but institutional investors."
Futures traders raised the probability of a quarter point rate hike at the Fed's June 13-14 policy meeting to 70 percent following the release of the jobs data but that was cut back to about 30 percent after two fed officials said they think central bank should keep rates where they are at least through the next meeting.
The Labor Department's closely watched May unemployment report, due on Friday, could decide whether a rate hike occurs.
Stocks on the move included Advance Auto Parts which plunged 35 percent after the auto parts retailer cut its full-year forecast. Also Intel which climbed 5 percent as the chipmaker said it was on track to hit the upper end of its second-quarter revenue forecast.