US stocks fall as rate rise debate continues and Big Tech job losses pile up

US stocks fell on Monday as investors weighed the outlook for interest rate rises following comments from Federal Reserve officials, and news of planned job cuts at Amazon added another name to a list of Big Tech dismissals.

Wall Street’s benchmark S&P 500 lost 0.9 per cent on Monday and the tech-heavy Nasdaq Composite decreased 1.1 per cent, as investors dialled back some of the enthusiasm that was displayed in a rally late last week induced by better than forecast inflation data.

The S&P 500 added 6.4 per cent on Thursday and Friday and the Nasdaq Composite climbed 9.3 per cent, its biggest two-day gain since 2008.

The moves came after annual US consumer price growth slowed to 7.7 per cent in October, less than the 8 per cent expected by economists. The reading eases pressure on the Fed to increase its main policy rate by 0.75 percentage points when it next meets in December, having implemented four such rises in a row in an aggressive campaign to tame historically high rates of inflation.

Fed vice-chair Lael Brainard on Monday acknowledged the US central bank still has “additional work to do” in its fight against inflation, even as she backed slowing the pace of future rate increases.

She said the Fed should “soon” bring its string of supersized interest rate increases to an end, but cautioned a slower pace of tightening did not mean policymakers were backing off in their efforts to tackle price pressures.

Over the weekend, Mary Daly, president of the San Francisco branch of the Fed, warned the next phase of policymaking would be “difficult”.

“You have to be mindful of the cumulative tightening that’s already in the system. You have to be mindful of the lags in monetary policy,” Daly told the Financial Times. “You have to be mindful of the risks that are all throughout the global economy and the tremendous uncertainty that we have, even about what the evolution of inflation is going to be.”

Fed governor Chris Waller told a UBS conference in Australia on Monday morning that rates were going to “keep going up” and “stay high for a while until we see this inflation get down closer to our target”.

Shares of Amazon fell 2.3 per cent on Monday following reports it would cull 10,000 corporate employees, the largest dismissals in the company’s history. The news, first reported by The New York Times, is the latest in a wave of Big Tech job cuts, with Meta, Twitter, and Stripe just some of the companies that have announced significant job losses.

In government bond markets, the yield on two-year US Treasuries rose 0.08 percentage points to 4.41 per cent, while the yield on the benchmark 10-year Treasury note added 0.04 percentage points to 3.87 per cent. Yields rise when prices fall.

The dollar index, which tracks the currency against six others, added 0.5 per cent, recovering some of its losses last week.

In Europe, the regional Stoxx Europe 600 index added 0.1 per cent, consolidating a more than 3 per cent rise last week. London’s FTSE gained 0.9 per cent.

Germany’s Dax rose 0.6 per cent and has now climbed by a fifth since its September low. Data out on Monday indicate industrial production in the eurozone rose 0.9 per cent in September, higher than the 0.3 per cent rise forecast by economists.

Shares in China-related real estate stocks soared after Beijing pivoted to support the country’s indebted property sector and softened its longstanding zero-Covid policy.

The Hang Seng Mainland Properties index added as much as 13.7 per cent. Hong Kong-listed Country Garden, China’s biggest developer, shot up 45 per cent.

The broader Hang Seng index in Hong Kong closed up 1.7 per cent, trimming gains after rising as much as 3.9 per cent. China’s CSI 300 finished 0.2 per cent higher. Japan’s Topix lost 1 per cent and South Korea’s Kospi fell 0.3 per cent.