Stocks fell on Wall Street on Thursday, deepening the slide in major indices as stubbornly high inflation continues to weigh on the economy.
NEW YORK – Stocks fell in morning trading on Wall Street on Thursday, deepening the decline in major indices as stubbornly high inflation continues to weigh on the economy.
The S&P 500, the benchmark for many index funds, is coming off its biggest drop in nearly two years. It fell another 0.9% and is down nearly 19% from the all-time high it set earlier this year. That’s just shy of the 20% point that defines a bear market. The last bear market occurred just two years ago, after the start of the virus pandemic.
The Dow Jones Industrial Average fell 400 points, or 1.3%, to 31,094 as of 11:07 a.m. ET, and the Nasdaq fell 0.1%.
Rising interest rates, high inflation, the war in Ukraine and a slowing Chinese economy have caused investors to reconsider the prices they are willing to pay for a wide range of stocks, from high-flying technology companies to traditional car manufacturers. Investors have been worried that runaway inflation that is hurting people who buy groceries and fill up their cars is also hitting corporate profits.
Target fell another 5% on the day after shedding a quarter of its value on a surprisingly weak earnings report. Department store company Kohl’s was largely unchanged after joining the list of retailers that reported weak earnings or cut forecasts due to inflation pressure.
Wall Street is also worried about the Federal Reserve’s plan to combat the highest inflation in four decades. The Fed is raising interest rates aggressively, and investors are concerned that the central bank could cause a recession if it raises rates too high or too quickly.
The 10-year Treasury edged back to 2.81% from 2.88% late Wednesday, but has generally been rising as investors brace for a market with higher interest rates. That has also pushed up mortgage rates, which is contributing to a slowdown in home sales.
The heap of concerns on Wall Street has led to very choppy trading and huge swings between profits and losses on any given day.
Tech stocks have been some of the most volatile positions. The sector includes heavyweights like Apple that have high valuations, which tend to push the market up or down more strongly. The sector has been particularly affected by the Fed’s policy change to raise interest rates. Low rates help support investments considered riskier, such as technology stocks, and higher rates reduce the incentive to take on that risk.
Tech stocks were once again among the biggest weights keeping the market lower on Thursday. Cisco Systems slumped 13.2% after the router and switch vendor lowered its profit forecast amid supply chain constraints.
Housewares companies, supermarket operators and food producers fell across the board. General Mills fell 3.5% and Tyson Foods fell 1.3%.
Retailers and other businesses that rely on direct consumer spending were mostly mixed. Bath & Body Works sank 9.2% after cutting its profit forecast for the year. Amazon rose 1.4%.