Stocks edge lower on Wall Street a day after broad sell-off; oil rises
NEW YORK, May 10, (AP): Stocks shed early gains and turned lower in late morning trading on Wall Street Tuesday as the market remains shaky a day after a broad sell-off.
The S&P 500 fell 0.3% as of 11:24 a.m. Eastern. The benchmark index was up as much as 1.9% in early trading. It slumped 3.2% a day earlier, hitting its lowest level in more than a year.
The Dow Jones Industrial Average fell 16 points, or 0.1%, to 32,153 and the Nasdaq fell 0.2%.
Big technology stocks, which have been swinging sharply both up and down recently, made slight gains and helped counter losses elsewhere in the market. Apple rose 1% and Microsoft rose 0.8%.
Bond yields eased. The yield on the 10-year Treasury fell to 2.95% from 3.08% late Monday.
Treasury yields have been rising and stocks have been extremely volatile recently as Wall Street adjusts to an aggressive turnaround in the Federal Reserve’s policies away from supporting the economy and towards fighting inflation. The central bank is raising interest rates from historic lows to fight persistently rising inflation, which is at its highest levels in four decades.
The central bank has raised its benchmark rate from close to zero, where it sat for much of the coronavirus pandemic. Last week, it indicated it will double the size of future increases.
Higher prices on raw materials, shipping and labor have been cutting into corporate financial results and forecasts. Many companies have been raising prices on everything from clothing to food, raising concerns that consumers will eventually cut spending, which would hurt economic growth.
Russia’s ongoing invasion of Ukraine has only increased worries about rising inflation. The conflict pushed already high oil and natural gas prices even higher, while putting more pressure on costs for key food commodities like wheat and corn. U.S. crude oil prices were relatively stable on Tuesday but are up more than 35% in 2022. Wheat prices are up more than 40%.
Investors are also still reviewing the latest round of corporate earnings with mixed results. Peloton tumbled 16.5% as the former pandemic darling of investors reported results that were much weaker than Wall Street was expecting. Food distributor Sysco rose 6.2% after beating analysts’ forecasts.
Pfizer rose 1.7% as it moves to buy migraine treatment developer Biohaven Pharmaceuticals for $11.6 billion. Pfizer already owns a portion of that company, which surged 70.2%.
Wall Street will get some more details on inflation later this week. The Labor Department on Wednesday will release its report on consumer prices for April. On Thursday, it will release its report on producer prices, or wholesale prices that impact businesses, for April.
Meanwhile, most Asian stock markets fell while Europe opened higher Tuesday as anxiety increased that U.S. interest rate hikes to fight inflation might stall economic growth.
London, Frankfurt and Shanghai rose. Tokyo, Hong Kong and Sydney declined. Oil prices advanced.
Wall Street futures were higher after the benchmark S&P 500 index fell 3.2% on Monday to its lowest level in more than a year.
The Federal Reserve is trying to cool inflation that is running at a four-decade high, but investors worry that might trigger a U.S. downturn. That adds to pressure from Russia’s war on Ukraine and a Chinese slowdown.
Traders are pricing in the “impending deterioration of economic conditions,” said Yeap Jun Rong of IG in a report.
In Asia, the Nikkei 225 in Tokyo lost 0.6% to 26,167.10 and Hong Kong’s Hang Seng dropped 1.8% to 19,633.69.
The Shanghai Composite Index gained 1.1% to 3,035.84 after the Chinese government told local authorities to help small businesses pay rent and other expenses in a new effort to boost anemic economic growth.
The Kospi in Seoul shed 0.6% to 2,596.56 and Sydney’s S&P-ASX 200 declined 1% to 7,051.20.
India’s Sensex advanced 0.3% to 54,623.12. New Zealand, Singapore and Jakarta retreated while Bangkok gained.
U.S. stocks have declined as the Fed turns away from a strategy of pumping money into the financial system, which boosted prices.
The U.S. central bank has raised its key rate from close to zero, where it sat for much of the coronavirus pandemic. Last week, it indicated it will double the size of future increases from its usual margin.
In energy markets, benchmark U.S. crude rose 66 cents to $103.75 per barrel in electronic trading on the New York Mercantile Exchange. The contract had plunged $6.68 to $103.09 on Monday. Brent crude, the price basis for international oil trading, added 54 cents to $106.48 per barrel in London. It fell $6.45 the previous session to $105.94.
The dollar declined to 103.23 yen from Monday’s 130.32 yen. The euro edged lower to $1.0560 from $1.0566.