 |
| Photo Credit: AP. |
(AP) - Stocks gave up some of their early gains in afternoon trading on Wall Street Tuesday as markets stagger amid recession worries.
The volatile
trading comes a day after a broad sell-off sent the Dow Jones Industrial
Average into a bear market, joining other major U.S. indexes.
The S&P
500 fell 0.3% as of 3:25 p.m. Eastern. The Dow fell 141 points, or 0.5%, to 29,120
and the Nasdaq edged 0.1% higher. The indexes are on pace for their sixth
consecutive loss.
Banks,
household goods makers and communications companies were among the biggest
weights on the market. Bank of America fell 1.5%, Procter & Gamble fell 2.3%
and Comcast slipped 2.6%.
Energy
stocks gained ground as U.S. oil prices rose 2.3%. Exxon Mobil rose 2.4%.
Small
company stocks held up better than the broader market. The Russell 2000 rose
0.4%.
Major
indexes remain in an extended slump. With just a few days left in September,
stocks are heading for another losing month as markets fear that the higher
interest rates being used to fight inflation could knock the economy into a
recession.
The S&P
500 is down roughly 8% in September and has been in a bear market since June,
when it had fallen more than 20% below its all-time high set on Jan. 4. The
Dow’s drop on Monday put it in the same company as the benchmark index and the
tech-heavy Nasdaq.
Central
banks around the world have been raising interest rates in an effort to make
borrowing more expensive and cool the hottest inflation in decades. The Federal
Reserve has been particularly aggressive and raised its benchmark rate, which
affects many consumer and business loans, again last week. It now sits at a
range of 3% to 3.25%. It was at virtually zero at the start of the year.
The Fed also
released a forecast suggesting its benchmark rate could be 4.4% by the year’s
end, a full percentage point higher than it envisioned in June.
Wall Street
is worried that the Fed will hit the brakes too hard on an already slowing
economy and veer it into a recession. The higher interest rates have been
weighing on stocks, especially pricier technology companies, which tend to look
less attractive to investors as rates rise.
Bond yields
were mostly higher Tuesday. The yield on the 2-year Treasury, which tends to
follow expectations for Federal Reserve action, fell to 4.31% from 4.34% late
Monday. It is trading at its highest level since 2007. The yield on the 10-year
Treasury, which influences mortgage rates, rose to 3.97% from 3.93%.
Fears of a
recession have grown as inflation remains stubbornly hot. Investors will be
watching the next round of corporate earnings very closely to get a better
sense of how companies are dealing with inflation. Companies will begin
reporting their latest quarterly results in early October.
Investors
are also closely watching the latest economic updates. Consumer confidence
remains strong, despite higher prices on everything from food to clothing. The
latest consumer confidence report for September from The Conference Board
showed that confidence was even stronger than expected by economists.
The government
will release its weekly report on unemployment benefits on Thursday, along with
an updated report on second-quarter gross domestic product. On Friday, the
government will release another report on personal income and spending that
will help provide more details on where and how inflation is hurting consumer
spending.