Stock losses mount as investors eye earnings, inflation

A late-afternoon sell-off wiped out gains for stocks on Wall Street Thursday and sent major indexes deeper into losing territory for the year.

The sharp about-face for the broader market was once again directed by technology stocks, which have been behind choppy trading throughout the week. As investors prepare for higher interest rates, shares in pricey tech companies and other expensive growth stocks look relatively less attractive.

The S&P 500 fell 50.03 points, or 1.1%, to 4,482.73, with nearly 85% of stocks in the index falling. The benchmark index closed at a three-month low after having been up as much as 1.5% earlier in the day. It’s now down 6% for the year.

The Nasdaq fell 186.23 points, or 1.3%, to 14,154.02, after rising as much as 2.1%. The index’s losses in recent months had by Wednesday left it in what Wall Street considers a market correction, or 10% below its peak. Apple fell 1% and chipmaker Nvidia shed 3.7%.

The Dow Jones Industrial Average fell 313.26 points, or 0.9% to 34,715.39.

Investors appeared to be bargain-hunting in early trading, but then reversed course and shifted money back toward safeplay investments. The less risky utilities sector was the only S&P 500 sector to close higher. Retailers and communications companies started out with gains but fell back in the afternoon. Meta Platforms dropped 1% and Lowe’s lost 4.6%.

The downturn follows a strong 2021 where the S&P 500 gained 26.9%. Investors may be resetting their expectations moving forward, said Mark Hackett, chief of investment research at Nationwide.

The Labor Department gave Wall Street a disappointing update on the labor market with its weekly unemployment report. The number of Americans applying for unemployment benefits rose to the highest level in three months as the fast-spreading omicron variant continued to disrupt the job market.

The job market has had a rocky recovery from the virus pandemic. The unemployment rate fell last month to a pandemic low 3.9%.

Employment data was also closely watched by investors trying to gauge how it might affect the Federal Reserve’s decision to reverse its support for the economy by raising interest rates. The central bank made it clear early in the pandemic that it was basing much of its support on how quickly employment recovers.

The Fed is now expected to raise rates earlier and more often than it had previously signaled in order to fight rising inflation that threatens to derail a further economic recovery. Supply chain problems and higher raw materials costs have prompted businesses to raise prices on finished goods and economists are concerned that consumers will eventually refuse to pay higher prices and cut their spending.