Stocks fall again on Wall Street, extending recent losses
NEW YORK — Stocks closed broadly lower on Wall Street on Tuesday as traders ponder what the Federal Reserve’s next steps will be in its campaign against stubbornly high inflation.
The S&P 500 suffered its fourth consecutive drop of 1.4%. The Dow Jones Industrial Average dropped 1%, while the Nasdaq composite lost 2.2%.
Technology stocks, communication companies and retailers had some of the biggest losses. Apple lost 2.5%, Disney dropped 3.8%, and AutoZone fell 2.8%.
Small stock companies also fell, bringing the Russell 2000 Index 1.5% lower. After posting two consecutive weekly gains, the major indexes are now on track for a weekly loss.
Bond yields fell. The yield on the 10-year Treasury slid to 3. 52% from 3. 58% late Monday.
European markets closed largely lower, while Asian markets closed mixed. Many companies made major moves after financial updates and buyout announcements.
Utility NRG Energy slumped 15.1% after announcing it is spending $2.8 billion in cash and assuming $2.4 billion in debt to buy Vivint Smart Home.
Jewelry company Signet vaulted 20.2% after raising its profit and revenue forecasts for the year.
Roughly 80% of stocks in the S&P 500 fell, leaving the benchmark index down 57. 58 points to 3,941.26. 350. was dropped by Dow 76 points to 33,596. 34, while the tech-heavy Nasdaq lost 225. 05 points to close at 11,014.89.
The Russell 2000 slid 27. 65 points to 1,812.58.
The broader market’s dip comes a day after stocks pulled back as stronger-than-expected readings on the economy raised worries that the Fed has a ways to go in getting inflation under control. The Fed is slowing down the economy by deliberately raising interest rates.
” Investors have been anticipating that the Fed would soon back off. They’ll pause soon, and possibly even begin cutting rates in the back 50% of 2023,”, said Bill Merz from U.S. Bank Wealth Management, head of capital markets research.
“And then, when we get the occasional strong jobs report and inflation report that make it clear that inflation is still quite problematic and it’sn’t decelerating at as fast as anyone would like,” Merz stated.
Investors closely monitor economic data and company announcements in order to gain a better understanding of the economy’s handling of stubbornly high inflation. They also want to see if inflation is decreasing at a pace that will allow for the Fed to reduce interest rate increases. The Fed’s policy could cause the economy to slow down and lead to a recession.
Next week, the Fed will meet and is expected raise interest rates by half-percentage point. The Fed has increased its benchmark rate six times in March, bringing it to a range between 3. 75% to 4%, the highest in 15 years. Wall Street expects that the benchmark rate will reach a peak range between 5% and 5. 25% by the middle of 2023.
Wall Street will receive a weekly update about unemployment claims on Thursday. The economy’s strongest sector is the job market.
Investors can get important updates about inflation and how consumers deal with high prices later in this week.
Friday will see the release of the November report by government on producer prices. Investors will be able to gain more insight into the impact inflation has on businesses.
The University of Michigan will release its December survey of consumer sentiment on Friday.
Fitch Ratings has revised its global economic growth forecasts downward to reflect Fed and other central bank interest rate hikes. With growing concerns about a possible recession, Fitch Ratings will release its December survey on consumer sentiment.
The Global Economic Outlook report by Fitch Ratings estimated global growth at 1.4% 2023,, a revision from 1.7% in its September forecast. The U.S. growth rate in 2023 was 0.2%, compared to 0.5% in September’s forecast. This is because the pace of tightening monetary policy increases.
Elaine Kurtenbach and Matt Ott contributed to this report.
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