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US Stocks Mixed, Dow Enters Bear Market09/27 15:51
A wobbly day of trading on Wall Street ended with a mixed finish for U.S.
stock indexes Tuesday as markets stagger amid worries about a possible
recession.
(AP) -- A wobbly day of trading on Wall Street ended with a mixed finish for
U.S. stock indexes Tuesday as markets stagger amid worries about a possible
recession.
The volatile trading comes a day after a broad sell-off sent the Dow Jones
Industrial Average into a bear market, joining other major U.S. indexes.
The S&P 500 slipped 0.2%, its sixth consecutive loss. The benchmark index
had been up 1.7% in the early going before a midafternoon pullback. The Dow
fell 0.4%, while the Nasdaq composite wound up with a 0.2% gain.
Major indexes remain in an extended slump. With just a few days left in
September, stocks are heading for another losing month as markets fear that the
higher interest rates being used to fight inflation could knock the economy
into a recession.
"The market right now is pricing in slower growth in the near term because
of higher interest rates and inflation that's been persistently hotter for
longer than expected," said Lindsey Bell, chief markets and money strategist at
Ally Invest.
The S&P 500 fell 7.75 points to 3,647.29. The Dow dropped 125.82 points to
29,134.99. The Nasdaq rose 26.58 points to 10,829.50.
The S&P 500 is down roughly 8% in September and has been in a bear market
since June, when it had fallen more than 20% below its all-time high set on
Jan. 4. The Dow's drop on Monday put it in the same company as the benchmark
index and the tech-heavy Nasdaq.
Central banks around the world have been raising interest rates in an effort
to make borrowing more expensive and cool the hottest inflation in decades. The
Federal Reserve has been particularly aggressive and raised its benchmark rate,
which affects many consumer and business loans, again last week. It now sits at
a range of 3% to 3.25%. It was at virtually zero at the start of the year.
The Fed also released a forecast suggesting its benchmark rate could be 4.4%
by the year's end, a full percentage point higher than it envisioned in June.
Wall Street is worried that the Fed will hit the brakes too hard on an
already slowing economy and veer it into a recession. The higher interest rates
have been weighing on stocks, especially pricier technology companies, which
tend to look less attractive to investors as rates rise.
Losses in household goods makers, communications companies and utilities
stocks outweighed gains elsewhere in the market. Procter & Gamble fell 2.7%,
Disney lost 2.3% and Edison International fell 2.9%.
Energy stocks gained ground as U.S. oil prices rose 2.3%. Exxon Mobil rose
2.1%.
Small company stocks held up better than the broader market. The Russell
2000 added 6.63 points, or 0.4%, to close at 1,662.51.
Bond yields were mostly higher Tuesday. The yield on the 2-year Treasury,
which tends to follow expectations for Federal Reserve action, fell to 4.31%
from 4.34% late Monday. It is trading at its highest level since 2007. The
yield on the 10-year Treasury, which influences mortgage rates, rose to 3.98%
from 3.93%.
Fears of a recession have grown as inflation remains stubbornly hot.
Investors will be watching the next round of corporate earnings very closely to
get a better sense of how companies are dealing with inflation. Companies will
begin reporting their latest quarterly results in early October.
Investors are also closely watching the latest economic updates. Consumer
confidence remains strong, despite higher prices on everything from food to
clothing. The latest consumer confidence report for September from The
Conference Board showed that confidence was even stronger than expected by
economists.
The government will release its weekly report on unemployment benefits on
Thursday, along with an updated report on second-quarter gross domestic
product. On Friday, the government will release another report on personal
income and spending that will help provide more details on where and how
inflation is hurting consumer spending.
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