Stocks end lower in choppy trade, on pace with weekly loss

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A choppy trading day ended Wednesday with a broad decline in stocks as Wall Street closed the books on a turbulent August that started strong but ended up leaving the market deeper in the red for l ‘year.

The S&P 500 fell 0.8%, extending its losing streak to a fourth day. The benchmark index ended the month with a loss of 4.2.% after jumping 9.1% in July.

The Dow Jones Industrial Average fell 0.9%, while the Nasdaq composite slipped 0.6%. Major stock indices are poised for weekly losses.

Tech stocks and large retailers were among the heaviest weights in the market. Only communication actions made a slight gain. Shares of smaller companies also fell, dragging the Russell 2000 Index down 0.6%.

The latest decline in equities came as Treasury yields rose broadly. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, rose to 3.17% from 3.11% on Tuesday night.

Bond yields rose alongside expectations of higher interest rates, which the Federal Reserve raised in an effort to crush the highest inflation in decades.

“You have the bond market now taking the Fed seriously,” said Willie Delwiche, investment strategist at All Star Charts. “And it’s not that stocks can’t overcome that, but so far they haven’t overcome it.”

The last time equities mounted a big rally was in July and early August, when bond yields hit their highs as expectations for higher rates eased.

“If the underlying trend in equities is down, then rising bond yields will weigh on it,” Delwiche said.

The S&P 500 fell 31.16 points to 3,955. The index is now down 17% year-to-date.

The Nasdaq lost 66.93 points to 11,816.20, while the Dow lost 280.44 points to close at 31,510.43. The Russell fell 11.48 points to 1,844.12.

Stocks got off to a good start in early August, continuing a rally in July. Investors were encouraged to see these signs that inflation, although still elevated, was stabilizing. That fueled optimism on Wall Street that the Federal Reserve might be able to cut interest rate hikes, its main weapon in its fight to lower inflation. These gains followed a weak first half where the S&P 500 fell 20% from its most recent peak and entered a bear market.

This optimism faded in mid-August when the central bank signaled that it continue to raise rates and keep them high as long as needed to bring the highest inflation in four decades under control. On Friday, Federal Reserve Chairman Jerome Powell outlined the Fed’s intent in a speech at the central bank’s annual symposium.

Wall Street fears that the Fed is putting the brakes on an already slowing economy too hard and pushing it into a recession. Rising interest rates have also hurt investment prices, especially for more expensive stocks like technology companies.

Traders are now trying to better understand how far and how fast the Fed’s rate hikes will go, starting with the central bank’s next interest rate policy meeting on September 20-21. The Fed has already raised interest rates four times this year and is expected to raise short-term rates another 0.75 percentage points at its September meeting, according to CME Group.

Investors are watching economic data closely for any further signs of the economy slowing down or inflation slowing or at least staying at its current level. Businesses and consumers have been hit hard by rising prices for everything from food to clothing, but recent drops in gasoline prices have brought some relief.

Strong US jobs data helped fuel expectations of further interest rate hikes. The Labor Department announced on Tuesday that there were two jobs for every unemployed person in July, giving arguments to Fed officials who argue the economy can tolerate more rate hikes to tame inflation that is at its peak. highest for several decades.

On Wednesday, payroll processor ADP said its latest monthly US private business hiring survey showed payrolls rose by 132,000, well below the 275,000 economists expected, according to FactSet.

The ADP survey comes ahead of the Department of Labor’s employment reports this week: jobless claims on Thursday and the August jobs report on Friday. Analysts expect both to show a robust job market.

Tech stocks and large retailers were among the heaviest hitters in the market on Wednesday. Chipmaker Nvidia fell 2.4% and Best Buy 5.6%. Energy companies fell as the price of US crude oil fell 2.3%. Occidental Petroleum fell 1.4%.

These losses helped control gains in communications stocks and elsewhere in the market.

Bed bath and beyond fell 21.3% after announcing a major restructuring and stock sale, while Instantaneousthe operator of the Snapchat messaging application, jumped 8.7% after announcing that it would lay off 20% of its workforce.

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