Wall Street ends mostly lower after another volatile day

Another volatile run on Wall Street left stocks lower on Tuesday, extending recent market losses as traders brace for updates on inflation and corporate earnings.

The Standard & Poor’s 500 fell 0.7%, marking its fifth consecutive loss. The benchmark was down as much as 1.2% at the start after a grim forecast from the International Monetary Fund fueled recession fears. It then gained as much as 0.8% before a late afternoon reversal.

The Nasdaq composite also fell back into the red, ending down 1.1%. The Dow Jones Industrial Average lost most of a 1.2% gain to end up 0.1%.

Major indexes entered the day with four straight losses. Recession fears have weighed heavily on markets as stubbornly scorching inflation burns businesses and consumers alike. Economic growth is slowing as consumers moderate spending and the Federal Reserve and other central banks raise interest rates.

The International Monetary Fund on Tuesday lowered its forecast for global economic growth in 2023 to 2.7%, from 2.9% it had estimated in July. The cut comes as Europe faces a particularly high risk of recession with energy prices soaring amid Russia’s invasion of Ukraine.

Wall Street is watching the Fed closely as it continues to aggressively raise its benchmark interest rate to make borrowing more expensive and slow economic growth. The objective is to calm inflation, but the strategy carries the risk of slowing the economy too much and plunging it into a recession.

“The market desperately wants a reason for the Fed to stop tightening and the data recently hasn’t given them that opening when it comes to inflation,” said Willie Delwiche, investment strategist at All Star Charts.

The S&P 500 fell 23.55 points to 3,588.84 and the Nasdaq fell 115.91 points to 10,426.19. The Dow Jones added 36.31 points to close at 29,239.19.

Technology accounted for a large share of the decline among S&P 500 companies. Chipmakers continued to slide following the US government’s decision to tighten export controls on semiconductors and equipment manufacturing chips to China. Qualcomm fell 4%.

Banks and communications stocks also weighed on the market, limiting gains for healthcare and home goods makers.

Small company stocks performed better than the broader market. The Russell 2000 Index rose 1 point, or about 0.1%, to 1,692.92.

Markets in Europe and Asia fell.

Uber fell 10.4% and Lyft fell 12% following a US government proposal that could give contract workers at ride-sharing companies and other gig-economy businesses full job status. ’employees.

US crude oil prices fell 2%.

Bond returns were mixed. The 10-year Treasury yield, which influences mortgage rates, rose to 3.93% from 3.88% Friday night. The two-year Treasury yield, which follows the action of the Federal Reserve, remained at 4.30%. Bond markets were closed on Monday for a public holiday.

The Fed will release the minutes of its last meeting on Wednesday, perhaps giving Wall Street more information on its views on inflation and next steps.

Investors still expect the Fed to raise its key rate by three-quarters of a percentage point next month. This would be the fourth such increase, triple the usual amount, and would bring the rate to a range of 3.75% to 4%. He started the year at practically zero.

The government will also release its wholesale price report on Wednesday, which will help provide more detail on how inflation is hitting businesses. The closely watched consumer prices report will be released on Thursday and a retail sales report is due on Friday.

“Everyone is still hoping that every inflation report will be the one that shows the pressure is easing,” Delwiche said.

Wall Street is also gearing up for the start of the latest corporate earnings season, which could provide a clearer picture of the effects of inflation, while raising questions about whether the Fed should continue its rate hikes. aggressive.

Among the companies reporting quarterly results this week: PepsiCo, Delta Air Lines and Domino’s Pizza. Banks, including Citigroup and JPMorgan Chase, will also report on the results.

Associated Press writer Yuri Kageyama contributed to this report.

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