Wall Street’s main indexes opened lower on Wednesday as Treasury yields rose on bets of more rate hikes by the Federal Reserve that offset optimism from strong China manufacturing data. Several big-name retailers have already offered discouraging forecasts for the upcoming year given the challenges U.S. households are facing because of high inflation and other factors. The Associated Press has the story:
Wall Street stocks drift amid interest rates fears
Newslooks- NEW YORK (AP)
Stocks are drifting Wednesday as Wall Street continues to brace for interest rates to stay higher for longer.
The S&P 500 was 0.2% lower in its first trading after coming off a frigid February. The Dow Jones Industrial Average was up 17 points, or 0.1%, at 32,674, as of 9:40 a.m. Eastern time, while the Nasdaq composite was 0.2% lower.
After a hot start to the year, the stock market has struggled as data piled up to show inflation and the overall economy are remaining more resilient than expected. That forced many investors to delay their forecasts for a recession to later in the year, while also raising their expectations for how high the Federal Reserve will take interest rates.
Higher rates can drive down inflation, but they hurt the economy by making borrowing more expensive and raise the risk of a recession later on. They also drag down on prices for stocks and other investments.
Several big-name retailers have already offered discouraging forecasts for the upcoming year given the challenges U.S. households are facing because of high inflation and other factors.
Ross Stores was among the latest to join them, and it fell 2.3% despite reporting better profit and revenue for the latest quarter than expected. It gave a forecast for profit this upcoming year that fell short of Wall Street’s expectations.
Its CEO, Barbara Rentler, said the company wanted to be conservative given so much uncertainty about the economy and world. She said high inflation is continuing to hit low to moderate-income customers.
Vaccine company Novavax tumbled 25.8% after it warned there’s “substantial doubt” about its ability to stay in business over the next year. It reported a net loss of $657.9 million for the last year.
Stock markets overseas were stronger following some encouraging data on the world’s second-largest economy.
Hong Kong’s Hang Seng index jumped 4.2% and stocks in Shanghai gained 1% after reports on manufacturing in China showed a strong recovery after anti-virus controls were lifted late last year. That followed a slump in activity that dragged last year’s economic growth to 3%, China’s second-lowest level since at least the 1970s.
In the bond market, the yield on the 10-year U.S. Treasury rose to 3.95% from from 3.93% late Tuesday. It helps set rates for mortgages and other loans that shape the economy.
