Stocks decline in worldwide pullback

Wall Street edged lower Wednesday after a rally that had sent it roaring 16% higher for the year.

The Standard & Poor’s 500 index fell 8.77 points, or 0.2%, to 4,446.82 to drift lower from its highest level since April 2022. The Dow Jones industrial average dropped 129.83 points, or 0.4%, to 34,288.64, and the Nasdaq composite lost 25.12 points, or 0.2%, to close at 13,791.65.

Other markets around the world fell more sharply after the latest discouraging signal from China’s economy. Growth in China’s services industry slowed more than economists expected last month.

The U.S. economy, meanwhile, has remained stronger than many investors feared. It has defied predictions for a recession because of a job market that’s remained remarkably solid despite much higher interest rates meant to bring down inflation.

A report Wednesday showed growth for U.S. factory orders held steady in May, though economists expected to see an acceleration.

Hope is rising that inflation is cooling enough to get the Federal Reserve to soon stop its rate hikes, which undercut inflation by slowing the entire economy. At its most recent meeting, the Fed decided to hold rates steady, the first time in more than a year that it refrained from raising rates.

Much of Wall Street expects the Fed to raise rates later this month. Less certain is whether a second increase will hit by the end of the year, as the Fed has been hinting. In the end, that may not matter much, said Ross Mayfield, investment strategy analyst at Baird.

“The Fed has either gone too far and damaged the economy, and we just haven’t seen it yet, or they haven’t,” he said.

“We’ll see that in due time,” he added..

Yields were mixed in the bond market. The yield on the 10-year Treasury edged up to 3.93% from 3.86% on Monday. The 10-year yield helps set rates for mortgages and other important loans.

The two-year Treasury yield, which moves more on expectations for the Fed, held steady at 4.94%.