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US Stocks Extend Losses Wednesday 01/19 16:08
Stocks closed broadly lower on Wall Street Wednesday and deepened the weekly
losses for major indexes following another choppy day of trading.
(AP) -- Stocks closed broadly lower on Wall Street Wednesday and deepened
the weekly losses for major indexes following another choppy day of trading.
The major indexes bounced between gains and losses throughout the day, with
technology stocks again giving direction to the broader market. The sector has
triggered much of the choppiness in the market as investors shift money in
expectation of rising interest rates. Higher rates make shares in high-flying
tech companies and other expensive growth stocks relatively less attractive.
"We've seen some givebacks from the returns we got last year," said Megan
Horneman, director of portfolio strategy at Verdence Capital Advisors. "What
we're seeing is that the market is resetting now."
The S&P 500 fell 44.35 points, or 1%, to 4,532.76, with 77% of stocks in the
benchmark index losing ground. The only sectors that closed with gains were
utilities and household goods makers, signaling a shift to less risky
investments traders.
The Dow Jones Industrial Average fell 339.82, or 1.2%, to 35,028.65.
The tech-heavy Nasdaq fell 166.64, or 1.1%, to 14,340.26 and is now 10.7%
below the all-time high it set on Nov. 19.
Technology giant Apple shed 2.1% and chipmaker Nvidia fell 3.2%.
Every major index set new lows for the year for the second day in a row.
Small company stocks, a gauge of confidence in economic growth, fell more
than the rest of the market. The Russell 2000 index fell 33.44 points, or 1.6%,
to 2,062.78.
Gold prices, which often rise when investors are nervous about risks in the
broader market, gained 1.6%.
Bond yields fell. The yield on the 10-year Treasury fell to 1.85% from 1.87%
late Tuesday.
Stocks have slid in January as investors gauge how rising inflation will
impact businesses and consumers, along with the Federal Reserve's next move on
interest rate policy.
Investors are busy reviewing the latest round of corporate earnings. Health
insurer UnitedHealth Group rose 0.3% after reporting encouraging financial
results. Bank of America rose 0.4% after reporting a jump in profits that beat
analysts' forecasts.
Household and consumer goods company Procter & Gamble rose 3.4% after also
reporting strong financial results. The maker of Dawn dish detergent and other
products reported strong results as it passed along higher costs to consumers.
Outside of earnings, Ford slumped 7.9% following news that it's recalling
about 200,000 cars in the U.S. to fix a problem that can stop the brake lights
from turning off.
Wall Street is closely watching the latest round of results to gauge whether
inflation is cutting into profit margins for companies and to see whether
consumers are accepting the higher prices without cutting back on spending.
Demand for goods has outpaced companies' capacity to make and supply products,
which has caused supply chain problems and raised raw materials costs.
Economists expect inflation to remain high until those supply chain issues
are solved and consumer demand is tempered. Meanwhile, the Federal Reserve is
speeding up its withdrawal of support for markets and the economy. The central
bank is likely to raise interest rates earlier and more often than had been
expected to fight rising inflation.
As of late Tuesday, investors were pricing in a better than 86% probability
that the Fed will raise short-term rates at its meeting of policymakers in
March. A month ago, they saw less than a 47% chance of that, according to CME
Group.
More big company earnings are on tap for Wall Street on Thursday. American
Airlines, Union Pacific, CSX and Netflix will all report their latest financial
results.
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