Wall Street’s main indexes fell on Wednesday over concerns about sticky inflation as investors awaited the Federal Reserve’s report on the U.S. economy for clues on the bank’s interest rate path. Apple was the biggest drag across the three major indexes, down 2.6% after a report said China had banned officials at central government agencies from using iPhones and other foreign-branded devices for work. The Associated Press has the story:
Wall Street slides on renewed inflation worries & Econ. data
Newslooks- NEW YORK (AP)
Stocks fell in morning trading on Wall Street Wednesday, continuing a weak stretch in a holiday-shortened week.
The S&P 500 fell 0.7%. Slightly more companies fell than rose within the index. The Dow Jones Industrial Average fell 163 points, or 0.5%, to 34,479 as of 10:46 a.m. Eastern. The Nasdaq slipped 0.9%.
Big technology stocks fell and weighed on the market. Apple slipped 2.7%. Health care stocks had some of the broadest losses. Johnson & Johnson fell 1.9% and Pfizer shed 2%.
Several companies made big moves after reporting earnings and other updates. Roku surged 8.1% after giving investors an encouraging financial update and saying it would cut 10% of its staff. AeroVironment jumped 27.8% after the maker of unmanned aircrafts raised its sales forecast for the year.
Markets in Europe fell and markets in Asia were mixed.
GameStop and Dave & Buster’s will release their latest results after the closing bell.
Investors face a relatively quiet week as they come off the Labor Day holiday in the U.S. and a busy August.
The services sector in the U.S. remained healthy, according to a survey from The Institute for Supply Management.
The survey showed that the sector, which employs most Americans, grew at a faster pace than economists expected in August. The sector is among the biggest pieces of the U.S. economy and it has remained resilient throughout 2023 despite persistent inflation and rising interest rates squeezing consumers.
Bond yields jumped following the report. The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 4.29% from about 4.25% just prior to the survey’s release.
The yield on the 2-year Treasury, which tracks expectations for the Federal Reserve, rose to 5.03% from 4.96% just prior to the survey’s results being released.
The dominant economic theme continues to be inflation and interest rates, which the Fed has boosted in an effort to bring down prices. Investors are hoping that the Fed might moderate interest rate increases going forward as inflation has been easing for months.
Wall Street expects the Fed to hold its benchmark interest rate steady at its next meeting later in September. Investors are mostly betting that the central bank will maintain that pause through the rest of the year. Economic updates last week on consumer confidence, jobs and inflation reinforced those hopes.
Inflation has been easing for months under the weight of the Fed’s aggressive rate hikes that started in 2022 and brought its main interest rate to the highest level since 2001. The policy raised concerns that the central bank might be too aggressive and hit the brakes on economic growth with enough force that the economy would be thrown into a recession.
A strong jobs market and consumer spending have propped up the broader economy and staved off a recession, so far. Wall Street will get several more economic updates on inflation and retail sales later in September ahead of the Fed’s next meeting.
