Stocks slide on Wall Street, wiping out weekly S&P 500 gains | Technology
By DAMIAN J. TROISE and ALEX VEIGA – AP Business Writers
Shares on Wall Street closed broadly lower on Wednesday as declines in big tech companies wiped out the S&P 500’s gains for the week.
The benchmark fell 0.7%, ending a three-day winning streak. The Dow Jones Industrial Average fell 0.5% and the tech-heavy Nasdaq fell 1.3%.
Small company stocks fell more sharply than the rest of the market, pushing the Russell 2000 down 1.6%.
Traders focused on a mix of retail updates that indicate inflationary pressure continues to affect businesses and consumers, but also shows that spending remains strong. A government report showed retail sales were flat last month and Target shares tumbled after the retail chain reported a nearly 90% slippage in quarterly profits.
“You’ve seen Target come out and be softer than we thought, so maybe that scared investors off a bit,” said Sylvia Jablonski, chief investment officer at Defiance ETFs. “That’s a small correction from the bear market rally.”
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The S&P 500 slipped 31.16 points to 4,274.04. The loss has sent the index down 0.1% so far this week.
The Dow Jones lost 171.69 points to 33,980.32, while the Nasdaq fell 164.43 points to 12,938.12. The Russell 2000 slipped 33.22 points to 1,987.31.
Trading was choppy throughout the week as the benchmark S&P 500 index comes off a four-week winning streak.
Expensive tech companies, communications stocks and retailers suffered some of the biggest losses. Only energy stocks posted gains as the price of US crude oil rose.
Bond yields rose significantly. The 10-year Treasury yield rose to 2.89% from 2.81% on Tuesday evening.
Wall Street has been taking a close look at the latest economic data and corporate updates to get a better idea of how inflation is affecting businesses and consumers and whether the highest inflation in 40 years is peaking or begins to calm down. Investors are also watching inflation to determine how far central banks should go in their fight against rising prices.
U.S. retail sales were flat last month, according to the Commerce Department, and economists had expected a slight increase in July. Part of the weakness stemmed from a 1.8% decline in gasoline sales, reflecting lower prices at the pump.
Meanwhile, Target fell 2.7% after reporting a nearly 90% drop in second-quarter profits as it was forced to cut prices to eliminate unwanted inventory. The retailer warned earlier this summer that it was canceling orders from suppliers and aggressively cutting prices due to a pronounced shift in spending by Americans as the pandemic subsided.
Children’s clothing and accessories chain Children’s Place fell 11% after reporting a surprise second-quarter loss due to supply chain issues and inflation pressure.
The UK inflation rate hit a new 40-year high of 10.1% in July, a faster pace than in the United States and Europe, as rising food prices in the United Kingdom tightened pressure on the cost of life fueled by soaring energy costs. Inflationary pressures prompted the Bank of England to raise its key rate by half a percentage point this month, the largest of six consecutive increases since December.
The Federal Reserve has raised interest rates in an effort to slow the economy and temper inflation, but investors fear it could put the brakes on too hard and send the economy into recession. In July, the Fed raised its benchmark interest rate by three-quarters of a point for the second consecutive time.
The central bank’s minutes from last month’s policymakers’ meeting offered no new insight into the Fed’s struggle to stifle inflation. Minutesreleased on Wednesday afternoon showed Fed policymakers expecting the economy to expand in the second half of 2022, although many suggested growth would weaken as higher rates take hold .
Slower growth, they noted, could “set the stage” for inflation to gradually fall to the central bank’s 2% annual target, although it remains “well above” that target. . But policymakers have made it clear that for now they intend to keep raising rates enough to slow the economy.
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