US close: Stocks fall ahead of Friday's payrolls

Wall Street stocks closed lower on Thursday, as traders awaited the release of key employment data scheduled for release on Friday.

The Dow Jones Industrial Average fell 1.66% to close at 32,254.86 and the S&P 500 dropped 1.85% to end the day at 3,918.32.

Meanwhile, the tech-heavy Nasdaq Composite slipped 2.05% to finish at 11,338.35.

In currency markets, the dollar fell against its major peers, trading down 0.04% on the pound at £0.8383, and decreasing 0.14% against the euro to €0.9438.

The greenback also declined on the yen by 0.18% to change hands at JPY 135.90.

“The back-and-forth week continues, as signs of some weakness in US employment data prompted hopes that perhaps Powell’s hawkishness earlier in the week was misplaced,” said IG chief market analyst Chris Beauchamp.

“US markets’ poor performance this year versus Europe has seen some bargain-hunting take place, and notably the Nasdaq 100 is back to where it was before the Fed chairman’s testimony earlier in the week.

“Most investors of course are now waiting to see how tomorrow’s jobs data plays out, which will set the stage for US inflation next week.”

Jobs data mixed ahead of Friday’s nonfarm payrolls

The number of jobless claims in the US increased unexpectedly last week, according to data from the Department of Labor.

In seasonally-adjusted terms, initial unemployment claims rose by 21,000 to reach 211,000 in the week ending on 4 March, surpassing economists' forecast of 195,000.

The four-week moving average, which smooths out weekly volatility, also rose by 4,000 to reach 197,000.

Meanwhile, secondary unemployment claims, which refer to those not filed for the first time and referencing the week ending on 25 February, increased by 69,000 to reach 1.718 million.

The prior week's reading for secondary claims was revised down by 6,000 to 1.655 million.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, conceded that it was the biggest rise since late November, but added that some of the rise was likely the result of "severe" weather in the upper Midwest and California - which would not last.

“The bigger picture here is that claims remain very low and range-bound. That said, the latest data from Challenger, released earlier today, show that the number of layoffs announced in January and February was the highest since 2009, and nearly double the pre-Covid trend.

“This will take time to filter through to the claims data, but we expect to see a clear and sustained increase by the spring.”

Indeed, staffing agency Challenger, Gray and Christmas revealed that layoff announcements in the US had hit their highest level since 2009 at the beginning of the year.

In February, US firms announced 77,770 job cuts, which was a 24% decline compared to the previous month.

However, the year-to-date layoff announcements reached 180,713, more than quadrupling compared to the same period in 2022.

The figure was also the highest recorded for the two months combined since the 428,000 job cuts announced in January and February.

Silvergate Bank wind-down has knock-on effects

In equities, shares of Silvergate Capital Corporation plummeted by 42.16% after the company announced its plan to liquidate its crypto-friendly lender Silvergate Bank and wind down operations.

That decision had a knock-on effect on Signature Bank, whose shares fell by 12.18% in response to Silvergate Bank's closure.

Meanwhile, General Motors experienced a decline of 4.88% after the announcement of a voluntary buyout programme that would involve offering all of its US-based office staff voluntary redundancy.

The move was expected to result in an employee separation charge of $1.5bn for the automaker.

Reporting by Josh White for Sharecast.com.