Stocks tumbled on Thursday after fresh data signaled that the labor market remains piping hot, heightening concerns that the Federal Reserve will raise interest rates for longer than expected.
The Dow Jones Industrial Average index dropped 494 points, or 1.4%. The S&P 500 fell 1.3% and the Nasdaq Composite slid 1.5%.
US private sector businesses added an estimated 497,000 jobs, according to payroll processor ADP's latest National Employment Report released Thursday. That's significantly higher than the 220,000 jobs economists predicted, according to Refinitiv.
Separately, weekly jobless claims data from the Department of Labor rose more than expected at the end of June, but remain well below pre-pandemic levels.
The labor data further worried investors already on edge about the Fed's hawkish stance against inflation after the June meeting minutes released Wednesday reiterated both that more hikes are likely coming and that the central bank predicts a possible mild recession later this year.
Oil prices fell as Wall Street grew fearful about the health of the economy. West Texas Intermediate crude futures, the US benchmark, fell to roughly $71 a barrel.
Investors are looking to the government's June jobs report due Friday for more insight into the state of the labor market. Economists project an addition of 200,000 jobs in June and that the unemployment rate will hold steady at 3.7%.
The VIX, known as Wall Street's fear gauge, surged about 18% to 16.8.
Both big and regional bank stocks fell. JPMorgan Chase fell 1.9%, Wells Fargo slid 2.2% and Citigroup declined 3.2%.
PacWest Bank slipped 8.4%, New York Community Bank fell 2.1% and KeyCorp slipped 3.8%.
