Wall Street Slips on Concerns of Higher Interest Rates
NEW YORK (AP) — Wall Street is slipping Thursday on worries that a too-warm economy will push the Federal Reserve to keep interest rates higher for longer.
- The S&P 500 was 0.5% lower in midday trading and on track for a third straight loss.
- Big Tech stocks were particularly weak, and the Nasdaq composite was 1.1% lower.
- The Dow Jones Industrial Average was up 0.1% at 34,471.
Bond Market Pressure
Stocks were feeling pressure from the bond market, where yields rose earlier in the week after a report showed stronger growth for U.S. services industries last month than economists expected.
Yields remained high after a report on Thursday said fewer U.S. workers applied for unemployment benefits last week than expected.
The Federal Reserve has already hiked its main interest rate to the highest level in more than two decades in hopes of slowing the economy enough to drive inflation back down to its 2% target.
But the worry is that the last percentage point of improvement may be the toughest for the Fed.
Impact on Tech Stocks
High interest rates tend to most hurt stocks of technology companies and others bid up on expectations for high growth far in the future.
Apple, the most valuable stock, fell 3.3% and Nvidia sank 2.7%.
C3.ai tumbled 11.9% after it said it no longer expects to be profitable in its final fiscal quarter of the year.
Analysts also pointed to disappointing profit margin levels for the company during its latest quarter.
WestRock rose 4.9% after Smurfit Kappa Group said it was in discussions to combine the two companies.
Bond Market Movements
The yield on the two-year Treasury slipped to 4.99% from 5.03% late Wednesday.
The yield on the 10-year Treasury fell to 4.28% from 4.30% late Wednesday.
Global Market Performance
In stock markets abroad, indexes fell in China following discouraging data on the world’s second-largest economy.
Hong Kong’s Hang Seng dropped 1.3%, and stocks in Shanghai fell 1.1% after a report said China’s exports fell from year-ago levels for the fourth straight month.
Traders still mostly expect the Fed to stand pat on interest rates at its next meeting later this month.
Stock indexes were moving only modestly in Europe and were mixed.
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.