The stock market found little encouragement to sustain any rebound attempt on the eve of the all-important U.S. jobs report, with major benchmarks finishing solidly lower on Thursday.

Aside from the anxiety that usually precedes those numbers, traders had to digest remarks from a raft of Federal Reserve speakers who sounded unequivocally committed to crushing inflation with rate hikes. The hawkish rhetoric helped push the S&P 500 to its second straight day of losses while lifting the dollar and Treasury yields. Oil topped US$88 a barrel.

In the run-up to the payrolls data, Wall Street braced for a mixed picture of a labor market that’s showing some signs of moderation while still remaining robust. With that in mind, several economists believe it may be just too early to think about concepts like “peak hawkishness” or “Fed pivot” as debated earlier in the week.

And officials are making that clear.

The central bank is “quite a ways away” from pausing its tightening campaign, according to Minneapolis Fed President Neel Kashkari. His Chicago counterpart Charles Evans noted the benchmark rate will probably be at 4.5 per cent to 4.75 per cent by next spring -- from the current 3 per cent to 3.25 per cent range. Cleveland Fed chief Loretta Mester said the U.S. is in an unacceptably high inflation environment.

 “I don’t think the Fed is going to be ready to pivot so quickly,” said Rich Steinberg, chief market strategist at The Colony Group. “We’re going to be in this kind of tug of war between good news, bad news. There’s going to still be a lot of volatility to this market.”

As a result, retail investors are stepping up their exodus after bailing on equities during the September rout. They have kept selling this week even as the S&P 500 posted its biggest two-day rally since April 2020, according to an estimate by JPMorgan Chase & Co. based on public data on exchanges.

The degree of anguish among individual investors and traders has been so pronounced that a sentiment gauge by Sundial Capital Research that measures the group’s conviction on a stock rally -- the so-called dumb-money confidence -- plunged to around 20 per cent last week. That’s among the lowest levels since the firm started tracking the data in 1998.

From a contrarian perspective, the pessimism among retail investors is welcome news for market observers looking for signs of flushed-out sentiment that often signal the selloff has reached its trough.

With the economy likely to slow down next year, tech stocks and U.S. equities are looking more attractive, according to Citigroup Inc. strategists led by Robert Buckland. They expect 18 per cent returns for global stocks by the end of 2023 but warn “it will likely be a volatile ride.”

“U.S. stocks are likely to stay volatile for the foreseeable future as the market continues to face worries related to high inflation, tightening monetary policy, supply chain issues, economic growth, and geopolitical uncertainty,” said Brian Belski, chief investment strategist at BMO Capital Markets.

As rising interest rates rattle investors and threaten businesses’ profits, the U.S. corporate-bond market will likely come under increased pressure, according to Arvind Narayanan at Vanguard Group Inc., who said the finances of corporations are “weakening incrementally” from very strong levels, which he anticipates will continue through the rest of 2022.

Mortgage rates in the U.S. fell, shifting direction after a six-week streak of gains that sent borrowing costs to a 15-year high. Even with the latest decline, mortgage costs have more than doubled since starting the year around 3 per cent -- a steep climb that has slammed the brakes on the pandemic housing rally, highlighting one of the Fed’s goals in its effort to cool inflation.

Elsewhere, Canada two-year yields hit the highest level since 2007 after the nation’s central bank Governor Tiff Macklem said he remains firmly on an interest-rate hiking path, quashing hopes for an imminent end to a tightening cycle that’s choking indebted households and threatening the economy with recession.

Key events this week:

• U.S. unemployment, wholesale inventories, nonfarm payrolls, Friday
• BOE Deputy Governor Dave Ramsden speaks at event, Friday
• Fed’s John Williams speaks at event, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 0.8 per cent
• The Dow Jones Industrial Average fell 1.1 per cent
• The MSCI World index fell 0.9 per cent

Currencies

• The Bloomberg Dollar Spot Index rose 0.7 per cent
• The euro fell 0.9 per cent to US$0.9797
• The British pound fell 1.5 per cent to US$1.1157
• The Japanese yen fell 0.3 per cent to 145.11 per dollar

Cryptocurrencies

• Bitcoin rose 0.1 per cent to US$20,010.03
• Ether rose 1 per cent to US$1,358.75

Bonds

• The yield on 10-year Treasuries advanced six basis points to 3.82 per cent
• Germany’s 10-year yield advanced five basis points to 2.08 per cent
• Britain’s 10-year yield advanced 13 basis points to 4.17 per cent

Commodities

• West Texas Intermediate crude rose 1.4 per cent to US$89.01 a barrel
• Gold futures rose 0.1 per cent to US$1,722.70 an ounce