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Stocks Drop After Fed Releases 'Beige Book'

Economy 'downshifted' over the summer
By Newser Editors and Wire Services
Posted Sep 8, 2021 3:42 PM CDT
Stocks Dip After Fed Says Economy 'Downshifted'
Sudy Gervais, right, talks with Lee Kessler, the owner of the Barracuda Taphouse & Grill, left, about a potential job at a job fair featuring local businesses in the Coconut Grove neighborhood of Miami, Wednesday, Sept. 8, 2021.   (AP Photo/Lynne Sladky)

(Newser) – Stocks closed lower on Wall Street Wednesday following a Federal Reserve report that shows US economic activity slowed this summer amid rising worries over resurgent coronavirus cases and mounting supply chain problems and labor shortages. The Fed’s latest survey of the nation’s business conditions, dubbed the “Beige Book,” found that US economic activity “downshifted” in July and August, the AP reports. In its report, the Fed said the slowdown was largely attributable to a pullback in dining out, travel and tourism in most parts of the country, reflecting concerns about the spread of the delta variant. The S&P 500 fell 5.96 points, or 0.1%, to 4,514.07. The Dow Jones Industrial Average fell 68.93 points, or 0.2%, to 35,031.07. The Nasdaq fell 87.69 points, or 0.6%, to 15,286.64. The Russell 2000 index of smaller companies fell 25.88 points, or 1.1%, to 2,249.73

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Investors could be in for a choppy market through September as they monitor the Federal Reserve and Washington, which has to deal with budget reconciliation, infrastructure spending, and the debt ceiling. "If you look at the calendar, it's aggressive," says Katie Nixon, chief investment officer at Northern Trust Wealth Management. The latest Beige Book will be used by Fed policymakers at their next meeting on Sept. 21-22 to help them decide how to move interest rates and whether to end the central bank’s $120 billion monthly bond purchases, which it has been making since the pandemic started to help lower long-term interest rates.

The S&P 500 was roughly split between gainers and losers, but weakness in technology and communication stocks weighed down the market. Shares of cryptocurrency trading platform Coinbase fell 3.2% after the company disclosed it was being investigated by the Securities and Exchange Commission over its plans to offer its cryptocurrency holders a chance to earn interest on their assets if they lent them out. The company said the regulator has threatened to take civil enforcement action, and the launch of the lending program has been delayed until at least October.

(Read more stock market stories.)

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