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Stocks weakened on Wednesday in directionless trade, poised to extend the previous day’s declines as rising COVID-19 infections momentarily upended expectations about growth. The Dow Jones Industrial Average and S&P 500 Index lost ground in Tuesday’s regular session, but the technology-laced Nasdaq bucked the trend by posting a marginal gain. The market has taken chiefly disappointing news in stride, but August’s jobs data falling far short of market expectations last week tempered hopes for the fourth quarter.

Payrolls showed the economy creating a relatively slim 235,000 new positions and stoked speculation that the Federal Reserve’s Open Market Committee (FOMC) could alter its timetable for scaling back its stimulative bond-buying, which has propped up investor confidence.  It also prompted analysts to scale back expectations for the economy for the remainder year. Goldman Sachs cut its forecast for fourth-quarter growth, citing a “harder path ahead” for consumer spending in the face of rising COVID-19 infections.

While the ongoing COVID-19 pandemic fueled by the Delta variant figured prominently in the jobs miss, especially for softness in the leisure, hospitality, and bars/restaurant sector, some analysts have also pointed to the labor shortage becoming a drag on jobs creation. A lack of available workers has prompted businesses to hike pay, adjust hours, and lose some business.

“Concerning no job gains in leisure and hospitality, while I’m not discounting the influence of Delta on consumer behavior for some and the supply problems out of Asia because of Covid dictated restrictions, I’m mostly blaming the lack of workers,” veteran market analyst Peter Boockvar said in a research note to clients on Tuesday. He pointed to National Federation of Independent Business data on Friday that showed plans to hire, positions not able to fill, and compensation at 48-year highs, all records for the survey.

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