Wall St slides 1% as labor data stokes rate hike concerns

Wall Street tumbled on Thursday as data signalling a resilient labor market and hawkish minutes of the Federal Reserve's June meeting fanned fears the central bank could keep interest rates higher for longer.

Private payrolls increased more than expected in June, the ADP National Employment report showed, indicating the labor market remained strong despite growing risks of a recession from higher interest rates.

Another survey showed the number of Americans filing new claims for unemployment benefits increased moderately last week.

"The Fed has been hopeful to see a modest deterioration in the labor market," said Randy Frederick, managing director of trading and derivatives for Charles Schwab.

"But since the ADP number was almost twice of what was expected, it generally implies there's potential for more rate hikes going forward."

Money market traders now see a near 95% chance of a quarter-point hike at the bank's next meeting on July 26, up from 90.5% earlier in the day, according to CME's Fed-watch tool.

Dallas Fed President Lorie Logan, a voting member of the Fed's rate-setting committee, said on Thursday "it would have been entirely appropriate" to raise rates at the June policy meeting itself.

All 11 major S&P 500 sectors were in the red in early trading, with technology stocks .SPLRCT leading declines, down 0.9%.

Meta PlatformsMETA.O rose 0.6% as it took aim at Twitter with its Threads app that attracted millions of users within hours of its launch on Wednesday.

U.S. stock indexes had slipped in the previous session after the Fed minutes showed a vast majority of the policymakers expected further policy tightening, even as they agreed to hold rates steady in June.

At 9:53 a.m. ET, the Dow Jones Industrial Average .DJI was down 341.58 points, or 1.00%, at 33,947.06, the S&P 500 .SPX was down 45.79 points, or 1.03%, at 4,401.03, and the Nasdaq Composite .IXIC was down 173.02 points, or 1.25%, at 13,618.64.

Investors await job openings and labor turnover survey and the Institute for Supply Management's non-manufacturing purchasing managers' index reading, due later in the day.

Among other movers, chipmakers Qualcomm QCOM.O and Intel INTC.O extended declines, dropping more than 1.8% each, as the trade war between Beijing and Washington escalated after China restricted exports of metals used in semiconductors on Monday.

Meanwhile, U.S. Treasury Secretary Janet Yellen began her four-day visit to Beijing amid skepticism over a productive outcome.

Exxon MobilXOM.N eased 1.9% on signaling a sharp drop in second-quarter operating profit on lower natural gas prices and weaker oil refining margins, according to a regulatory filing.

JetBlue AirwaysJBLU.O fell 3.8% after the company said it would follow a U.S. judge's May order to end an alliance with American Airlines AAL.O to protect a planned $3.8 billion purchase of Spirit Airlines SAVE.N.

Declining issues outnumbered advancers by a 10.68-to-1 ratio on the NYSE and a 4.86-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded 12 new highs and 45 new lows.