NEW YORK (AP) — Most of the U.S. stock market fell Wednesday as Wall Street grappled with a U.S. stock market setback. The American economy remains dynamic through its many challenges.
The S&P 500 slipped 0.3% to close its third losing month in the last four. The Dow Jones Industrial Average fell 443 points, or 0.9%, and the Nasdaq composite added 0.2%.
Stocks fell after reports suggested the U.S. economy was even stronger in the spring than previously thought. This allowed yields to remain high in the bond marketwhich in turn maintained the pressure weighing on stocks and all financial markets.
The day started with gains for stocks following an encouraging inflation report it wasn’t that bad in the United States last month, as economists predicted. It said the cost of living for U.S. consumers overall was 3.4% higher in August than a year earlier. This inflation rate is not as high as the 3.7% inflation rate economists expect, although it is still below the Fed’s 2% target.
The report followed others from around the beginning of the month inflation during August, but it is the one that the Federal Reserve prefer to use.
Short-term Treasury yields fell as traders reduced bets that the Fed would raise its main interest rate next month to better control inflation. They now see only a 37% chance of that happening, down from the luck of the draw seen a day earlier, according to CME Group data.
That allowed the yield on the two-year Treasury note to briefly fall as low as 4.83% before returning to 4.89%, where it was late Tuesday.
But long-term yields have been rising in the bond market. Part of the reason is that concerns about high inflation are just one of the reasons long-term yields have jumped in the U.S. and around the world.
The seemingly strong U.S. economy is another. In addition to Wednesday’s better-than-expected report on the U.S. economy as a whole, another update said growth in business activity in the Midwest was also stronger than economists expected.
Much of the strength in the U.S. economy is due to consumers, who are increasing their spending more than their incomes are increasing.
“The consumer remains resilient, in a much better position than previously thought,” according to Gary Schlossberg, global strategist at the Wells Fargo Investment Institute.
Other factors driving Treasury yields higher also continue to sharpen, including concerns about the scale of debt backed by Washington and other governments around the world.
Oil prices, meanwhile, have risen during their latest fluctuations amid uncertainty over when the war with Iran will fully restore the flow of crude. Brent crude, the international standard, climbed 1.9% to settle at $98.03 a barrel.
All this allowed the yield on the 10-year Treasury, which is the centerpiece of the bond market, to fall as low as 5.20% in the morning before rising again to 5.29%. That’s up from 5.26% Tuesday night, and a return to where it was more than two decades ago, in 2002.
The 30-year Treasury yield, which takes into account expectations for inflation and economic growth over several years, rose to 5.64% from 5.59% Tuesday evening.
Higher yields slow down the overall economy by making borrow more expensive money for everyone, while reducing the prices of all kinds of investments.
AP AUDIO: Most US stocks fall after bond market increases pressure
The bond market is putting pressure on stocks.
On Wall Street, Cal-Maine Foods fell 0.7% after the nation’s largest egg company reported a loss for the latest quarter that was wider than analysts expected. With plenty of eggs available on the market, Cal-Maine Foods saw a sharp drop in the prices it could charge compared to the previous year.
Hewlett Packard Enterprise helped limit market losses, rising 3.9%. It raised its turnover forecasts for its networks activity, which is benefiting from the boom in the market. artificial intelligence technology.
MongoDB climbed 3.4% after the database company’s board boosted its plan to send cash to shareholders by $1 billion through the repurchase of its own shares. This helped MongoDB recoup some of its steep loss from earlier this week, after announcing that Chirantan “CJ” Desai was leaving his CEO role to take a senior role at Meta Platforms.
Overall, the S&P 500 fell 19.30 points to 7,651.54. The Dow Jones Industrial Average fell 443.87 to 50,906.05, and the Nasdaq composite added 63.52 to 26,861.06.
On foreign stock markets, indices fell in Europe after a mixed result in Asia. Japan’s Nikkei 225 jumped 1.9%, while France’s CAC 40 fell 0.9%, representing two of the biggest moves in the world.
___
AP Business writers Yuri Kageyama and Michelle Chapman contributed to this report.
Gn bussni
