Wall Street Down; Sept Slump Worsens 09/26 10:23
Wall Street is back to falling on Tuesday as its September swoon worsens.
NEW YORK (AP) -- Wall Street is back to falling on Tuesday as its September
The S&P 500 was 1.2% lower in morning trading, coming off a rare gain and on
track for its fifth drop in six days. The Dow Jones Industrial Average was down
294 points, or 0.9%, at 33,712, as of 10:20 a.m. Eastern time, and the Nasdaq
composite was 1.3% lower.
Stocks have tumbled this month, which is on track to be Wall Street's worst
of the year, as the realization sets in that the Federal Reserve will indeed
keep interest rates high for a long time. The growing understanding has sent
yields in the bond market to their highest levels in more than a decade, which
in turn has undercut prices for stocks and other investments.
Treasury yields were holding relatively steady Tuesday following a mixed
batch of reports on the economy. The yield on the 10-year Treasury slipped to
4.51% from 4.54% late Monday, though it's still near its highest level since
One report showed confidence among consumers was weaker than economists
expected. That's concerning because strong spending by U.S. households has been
a bulwark keeping the economy out of a long-predicted recession.
A separate report said sales of new homes across the country slowed by more
last month than economists expected, while a third report suggested
manufacturing in Maryland, the Virginias and the Carolinas may be steadying
itself following a more than yearlong slump.
While housing and manufacturing have felt the sting of high interest rates,
the economy overall has held up well enough to raise worries that upward
pressure still exists on inflation. That pushed the Fed last week to say it
will likely cut interest rates by less next year than earlier expected. The
Fed's main interest rate is already at its highest level since 2001 in its
drive to get inflation back down to its target.
Besides high interest rates, a long list of other worries is also tugging at
Wall Street. The most immediate is the threat of another U.S. government
shutdown as Capitol Hill threatens a stalemate that could shut off federal
services across the country.
Wall Street has dealt with such shutdowns in the past, and stocks have
historically been turbulent in the runup to them, according to Lori Calvasina,
strategist at RBC Capital Markets.
After looking at the seven shutdowns that lasted 10 days or more since the
1970s, she found the S&P 500 dropped an average of roughly 10% in the three
months heading into them. Stocks managed to hold up rather well during the
shutdowns, falling an average of just 0.2%, before rebounding meaningfully
Besides the threats of higher interest rates for longer and a possible
federal shutdown, Wall Street is also contending with higher oil prices, shaky
economies around the world, a strike by U.S. auto workers that could put more
upward pressure on inflation and a resumption of U.S. student-loan repayments
that could dent spending by households.
On Wall Street, the vast majority of stocks were falling, including 90% of
those within the S&P 500.
Big Tech stocks tend to be among the hardest hit by high rates, and they
were the heaviest weights on the index. Apple fell 2%, Microsoft lost 1.8% and
Amazon tumbled 3.3%.
Cintas dropped 3.7% for one of the larger losses in the S&P 500. The
provider of employee uniforms, mops, fire extinguishers and other services
reported stronger profit for its latest quarter than analysts expected. It also
raised its forecasts for revenue and profit for the full fiscal year, but still
within a range that many analysts earlier expected.
Stocks were also falling in markets abroad, with indexes lower across Asia
and much of Europe.
Japan's Nikkei 225 fell 1.1%, South Korea's Kospi dropped 1.3% and Hong
Kong's Hang Seng lost 1.5%.
In China, concerns continued over heavily indebted real estate developer
Evergrande. The property market crisis there is dragging on China's economic
growth and raising worries about financial instability.
France's CAC 40 fell 0.7%, Germany's DAX lost 0.8% and the FTSE 100 in
London was an outlier with a 0.2% gain.
Crude oil prices were slipping after charging higher through the summer and
adding to worries about inflation. A barrel of benchmark U.S. crude dipped
0.2%, to $89.50. Brent crude, the international standard, was down 0.3%, to
$91.59 per barrel.