Stocks finished lower Tuesday as the dollar reversed earlier declines, while Treasury yields jumped, after data showed a sharp spike in July job openings that could add to wage pressures heading into Friday's non-farm payroll report.
The dollar pullback, perhaps the most significant factor in the overnight optimism, was linked in part to bets on faster interest rate hikes from the European Central Bank, which will gather in Frankfurt for its next policy meeting on September 8 - two weeks before the Federal Reserve's next decision in Washington.
Bets on a 75 basis point move from the ECB, following its first move higher since 2014 last month, are now passing 50% in European rate markets as members of the central bank's Governing Council warn of inflation risks linked to the region's energy crisis.
The move was reversed, however, following the July JOLTs report showing a big jump in overall vacancies, which were pegged at 11.239 million last month, with the June tally also revised higher, to 11.04 million.
A better-than-expected reading for August consumer confidence added to the downturn, with the Conference Board's closely-watched reading rising 8 points from July to 103.2 points.
With ADP private payrolls looming Wednesday, weekly unemployment claims Thursday and the key August non-farm payroll report on Friday, investors are now boosting bets on a third 75 basis point rate hike from the Fed, with the odds pegged at around 76.5%, according the CME Group's FedWatch.
Market optimism was also tempered by news of fresh Covid lockdowns in China, where officials continue to enforce their 'zero Covid' health policies. Dalian's 5.9 million citizens will be unable to move freely for the next three days, while citizens in Shenzen will face strict rules on gathering and commerce following new infection outbreaks.
The reports kept a lid on global oil prices in New York trading, with Brent crude contracts falling $5.83 per barrel to $99.26 and WTI futures down $5.02 to $91.99 per barrel.
The U.S. dollar index was marked 0.4% lower against its global peers at 108.79, while benchmark 2-year Treasury note yields jumped 6 basis points to 3.482% in New York trading.
On Wall Street, the S&P 500 finished down 1.10%, while the Dow Jones Industrial Average fell 308 points, or 0.96%, to 31,790. The tech-focused Nasdaq lost 1.12%.
In Europe, banking stocks powered modest early gains for the region-wide Stoxx 600, but it was marked 0.49% lower heading into the close of trading, while the MSCI ex-Japan index in Asia ended the session with a 0.64% gain even with the Covid-linked weakness in China stocks.
Meme-stock favorite Bed, Bath & Beyond (BBBY) shares finished down 9.29%, after an initial surge as retailer investors poured back into the struggling retailer ahead of its turnaround update later in the week.
Best Buy (BBY) shares jumped 1.6% after the tech-focused retailer posted better-than-expected second quarter earnings thanks in part to deeper discounts that offset a pullback in consumer electronics spending.
Peloton Interactive (PTON) shares dropped 8.50% after the connected fitness group asked the Securities and Exchange Commission for more time to file its annual report.
Lucid Group (LCID) shares bumped 6.3% lower after the luxury electric vehicle maker unveiled plans to raise around $8 billion to boost its working capital.
