Connect with us

Hi, what are you looking for?

Hard News Hard Hitting News Source Global Political News

Business News

Stocks slip as worries about high rates weigh on Wall Street

FILE – A trader looks over his cell phone outside the New York Stock Exchange, Wednesday, Sept. 14, 2022, in the financial district of Manhattan in New York. (AP Photo/Mary Altaffer, File)

NEW YORK (AP) — Wall Street is slipping on Monday, adding to losses from the end of last week on worries about higher interest rates and inflation.

The S&P 500 was 0.4% lower in midday trading and on track for a second straight fall after a stunningly strong report on the U.S. jobs market dented the market’s hopes for easing interest rates. The Dow Jones Industrial Average was down 55 points, or 0.2%, at 33,870, as of 11:20 a.m. Eastern time, while the Nasdaq composite was 0.5% lower.

Some of the sharpest action was again in the bond market, where expectations are rising for the Federal Reserve to stay firm on keeping interest rates higher for longer to combat inflation. It’s something the Fed has been talking about for a long time, but also something the market has been stubborn about not believing fully.

The yield on the two-year Treasury, which tends to track expectations for the Fed, leaped. It zoomed to 4.42% from 4.29% late Friday and just 4.10% the day before. That’s a significant move for the bond market. The 10-year yield, which helps set rates for mortgages and other important loans, jumped to 3.61% from 3.52% late Friday.

Higher rates slow the economy by design, in hopes of suppressing the demand for purchases that can fuel inflation. But they also raise the risk of a severe recession and hurt markets in the meantime.

Friday’s jolting jobs report showed that U.S. employers added a third of a million more jobs than expected last month despite higher rates. Normally, such strength would be good news for markets. At the least, it should mean higher sales for many companies.

But it also raised worries a too-strong labor market will keep inflationary pressures alive and force the Fed to keep rates higher for longer. That’s in direct opposition to hopes in the market that cooling inflation could get the Fed to pause its rate increases soon and then cut rates late this year.

Such hopes had driven a big rally on Wall Street to start the year, and the S&P 500 still remains up more than 7% for 2023 so far. The stocks leading the way had been the ones most beaten down last year by the rattlingly swift rise in rates engineered by the Fed to combat inflation. Those include tech stocks and others seen as the riskiest or most expensive.

Investors came into the year extremely skeptical about such stocks, and once they got a spark higher, momentum for them quickly snowballed. Analysts have said the rebound was more about improvements in sentiment than any changes in the economy or other fundamentals.

Fed Chair Jerome Powell may give some more clues about where rates are heading on Tuesday, when he’s scheduled to speak at the Economic Club of Washington, D.C.

Besides Powell, markets are also waiting to hear from nearly 100 companies in the S&P 500 this week about how much profit they made during the final three months of 2022.

The earnings reporting season is at its halfway point, with roughly half the companies in the S&P 500 companies having reported, and they’re on track for a roughly 5% drop from year-earlier levels, according to FactSet. That would be the first such drop since the summer of 2020, when the pandemic was ravaging the global economy.

Tyson Foods 4.3% fell after it reported weaker profit and revenue for its latest quarter than analysts expected.

Dell Technologies dropped 4% after it said it will cut about 5% of its workforce. The company’s vice chairman said in a message to employees that “market conditions continue to erode with an uncertain future.”

Advertisement. Scroll to continue reading.

On the winning side was Idexx Laboratories, a company in the pet healthcare industry. It rose 2.1% after reporting stronger profit and revenue than expected.

Copyright 2021 Associated Press. All rights reserved.

Source: https://apnews.com/article/inflation-financial-markets-federal-reserve-system-united-states-government-hong-kong-bfc671730c2c519a1f57c3107ee10d8c

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

Business News

EUGENE, Ore. (AP) — Psilocybin tea, wind chimes and a tie-dye mattress await those coming to an office suite in Eugene to trip on...

Business News

The U.S. government is taking aim at what has been an indomitable empire: Google’s ubiquitous search engine that has become the internet’s main gateway....

Accidents

LAHAINA, Hawaii (AP) — Ambulance and fire truck sirens wailed outside as Elsie Rosales stripped linens from king-sized mattresses at a beachfront resort in...

Accidents

TAFEGHAGHTE, Morocco (AP) — Survivors with shovels worked alongside bulldozers Monday to dig through remote Moroccan villages flattened by a monstrous earthquake, as hope dwindled...

Copyright © 2023 Hard News Herd Hitting in Your Face News Source | World News | Breaking News | US News | Political News Website by Top Search SEO