Stocks closed broadly lower on Wall Street on Tuesday, extending a recent string of market losses, as traders ponder the next moves from the Federal Reserve in its campaign to cool stubbornly high inflation.
The S&P 500 fell 1.4%, its fourth straight decline. The Dow Jones industrial average fell 1% and the Nasdaq composite lost 2%.
Technology stocks, communication companies and retailers had some of the biggest losses. Apple fell 2.5%, Disney fell 3.8% and AutoZone fell 2.8%.
Small company stocks also fell, sending the Russell 2000 Index down 1.5%. The major indices are on track for a weekly loss after posting two consecutive weekly gains.
Bond yields fell. The 10-year Treasury yield fell to 3.52% from 3.58% late Monday.
European markets ended mostly lower and Asian markets ended mixed.
Several companies made big moves following financial updates and purchase announcements.
Utility company NRG Energy slumped 15.1% after announcing it will spend $2.8 billion in cash and take on $2.4 billion of debt to buy Vivint Smart Home.
Jewelry company Signet jumped 20.2% after raising its earnings and revenue forecasts for the year.
About 80% of the stocks in the S&P 500 fell, leaving the benchmark index down 57.58 points at 3,941.26. The Dow fell 350.76 points to 33,596.34, while the technology-heavy Nasdaq lost 225.05 points to close at 11,014.89.
The Russell 2000 fell 27.65 points to 1,812.58.
The broader market slide comes a day after stocks fell as stronger-than-expected readings on the economy raised concerns that the Fed has a ways to go in reining in inflation. The Fed is doing it by intentionally slowing down the economy with higher interest rates.
“We’ve been in this period where investors have been anticipating now that the Fed will pull back very soon, pause soon and probably even start cutting rates in the second half of 2023,” said Bill Merz, head of market at capitals. research at US Bank Wealth Management.
“And then when we get the occasional robust jobs report and the inflation report that makes it clear that inflation is still pretty problematic and it’s not slowing down as quickly as anyone would like,” Merz said.
Investors are closely watching economic data and company announcements to get a better idea of how the economy is handling stubbornly high inflation. They are also trying to determine if inflation is falling at a rate that allows the Fed to moderate interest rate increases. The Fed’s policy risks slowing down the economy too much and sending it into a recession.
The Fed will meet next week and is expected to raise interest rates by half a percentage point. It has raised its benchmark rate six times since March, taking it to a range of 3.75% to 4%, the highest in 15 years. Wall Street expects the benchmark rate to hit a maximum range of 5% to 5.25% by mid-2023.
Wall Street will get a weekly update on jobless claims on Thursday. The labor market has been one of the strongest pockets of the economy.
Investors will receive important updates on inflation and how consumers are dealing with high prices later in the week.
On Friday, the government will publish its November report on producer prices. That will give investors more information about how inflation is affecting companies.
The University of Michigan will release its December survey on consumer confidence on Friday.
Faced with growing concerns about a recession, Fitch Ratings revised its global economic growth forecasts downward to reflect interest rate hikes by the Fed and other central banks.
The ratings agency’s Global Economic Outlook report estimated global growth at 1.4% in 2023, revised down from 1.7% in its September forecast. It put US growth in 2023 at 0.2%, down from 0.5%, as the pace of monetary policy tightening increases.
Elaine Kurtenbach and Matt Ott contributed to this report.
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