NEW YORK (AP) — Wall Street fell back on Tuesday despite some easing of pressure from the bond market.
The S&P 500 fell 0.6% in early trading, a rare rally and its fifth decline in six days. As of 9:45 a.m. ET, the Dow Jones Industrial Average was down 152 points, or 0.4%, at $33,854, and the Nasdaq Composite Index was down 0.6%.
Stock prices have fallen this month, and there is a growing perception that they are reaching their worst levels this year. The Federal Reserve will certainly keep interest rates high for a long time. The growing understanding has pushed bond market yields to their highest levels in more than a decade, resulting in lower prices for stocks and other investments.
US Treasury yields were more stable on Tuesday ahead of some reports on the US economy. The yield on the 10-year Treasury note fell to 4.52% from 4.54% late Monday, but remains near its highest level since 2007.
Reports on consumer confidence, new home sales and manufacturing are released later in the morning, which could cause yields to fluctuate.
Although housing and manufacturing are feeling the brunt of high interest rates, the broader economy is holding up well, raising concerns that upward pressure on inflation remains. In response, the Federal Reserve announced last week that next year’s rate cuts are likely to be smaller than originally expected. The Fed’s key interest rate is already at its highest level since 2001 as it seeks to bring inflation back on target.
In addition to high interest rates, a number of concerns are plaguing Wall Street. The most direct is US government shutdown threat again There is a risk that the U.S. Capitol will once again be in stalemate and that federal services across the United States will be shut down.
Wall Street has dealt with such shutdowns before, and stock prices have historically rallied wildly in the lead-up to shutdowns, said Lori Calvasina, a strategist at RBC Capital Markets.
They looked at seven factory closures that lasted for 10 days or more since the 1970s and found that the S&P 500 index declined an average of about 10% in the three months following them. Stocks managed to hold up during the shutdown, dropping an average of just 0.2%, but have since rebounded significantly.
In addition to the threat of longer interest rates and a possible federal government shutdown, Wall Street is also worried about rising oil prices, unstable economies around the world, Strike by US autoworkers This could further increase upward pressure on inflation, causing U.S. student loan repayments to resume and putting pressure on household spending.
On Wall Street, the majority of stocks fell, including 85% of the S&P 500.
Big tech stocks accounted for the most weight in the market. These companies tend to be hit hardest by rising interest rates, with Apple and Microsoft both down 0.9%.
Cintas fell 2.8%, one of the biggest losses in the S&P 500. The company, which provides services such as employee uniforms, mops and fire extinguishers, reported stronger profit for its latest quarter than analysts expected. The company also raised its full-year sales and profit forecasts, but they are still within the range that many analysts had expected.
Stock prices also fell in overseas markets, with indexes across Asia and much of Europe falling.
Japan’s Nikkei Stock Average fell 1.1%, South Korea’s Kospi fell 1.3% and Hong Kong’s Hang Seng fell 1.5%.
Concerns continued in China about Evergrande, a real estate developer with a large amount of debt. China’s real estate market crisis is hampering China’s economic growth and raising concerns about financial instability.
France’s CAC40 index fell 0.8%, Germany’s DAX index fell 0.8%, and London’s FTSE100 index rose 0.2%, an outlier.
Oil prices were mixed as prices rose over the summer and concerns about inflation intensified. Benchmark U.S. crude oil rose 0.1% to $89.76 a barrel. Brent crude oil, the international standard, fell 0.2% to $91.74 per barrel.
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AP Business writers Yuri Kageyama and Matt Ott contributed.
