Wall Street slipped again Wednesday after a stronger-than-expected report on the US economy weakened hopes that easier interest rates would arrive soon.
- The S&P 500 fell 26.77 points, or 0.6%, to 4,739.21, its second straight drop.
- The Dow Jones Industrial Average fell 94.45 points, or 0.3%, to 37,266.67.
- The Nasdaq composite fell 88.73 points, or 0.6%, to 14,855.62
Rising yields in the bond market again put downward pressure on stocks. Yields climbed after a report showed sales at US retailers were stronger last month than economists expected, which could keep upward pressure on inflation, the
AP reports. That could push the Federal Reserve to wait longer than traders expect to begin cutting rates.
The yield on the 10-year Treasury jumped immediately after the retail-sales report and climbed to 4.10% from 4.06% late Tuesday and from 3.85% a few weeks ago. Higher yields can crimp profits for companies, while also making investors less willing to pay high prices for stocks. Higher yields hurt all kinds of investments, and high-growth stocks tend to be some of the hardest hit. Drops of about 1% or more for Tesla, Apple, and Amazon were some of the heaviest weights on the S&P 500. The smaller stocks in the Russell 2000 index also slumped more than the rest of the market, down 1.1%.
A top Fed official, Gov. Christopher Waller, said Tuesday that the central bank could take its time before its next move on rates given how resilient the economy has remained. "These comments leave a rate cut as early as March on the table but also indicate that such a move is not a done deal," according to economists at Deutsche Bank led by Amy Yang. On Wednesday, across the Atlantic Ocean, the head of the European Central Bank warned in a speech about the risks of cutting rates too soon. Interest rates are one of the main levers that set stock prices. The other is corporate profits, and several companies reported weaker results on Wednesday than analysts expected.
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US Bancorp dropped 1.4% after reporting weaker profit than analysts expected. Big 5 Sporting Goods fell 8% after it said it expects to report a worse loss for the last three months of 2023 than earlier expected because of weak sales of winter-related products. It said it's been hurt by warmer temperatures and a lack of snowfall in the West. Spirit Airlines was under heavy pressure again and sank 22.5%. Its stock nearly halved a day before after a US judge blocked its purchase by JetBlue Airways out of fear that it would lead to higher airfares. JetBlue lost 8.7%.
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