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Banks and energy companies led a large decline in stocks on Wall Street on Tuesday, giving the S&P 500 its sixth loss in the last seven trading days.
The S&P 500 fell 0.6% after an early gain faded mid-afternoon. The benchmark index’s 11 sectors all finished in the red, with banks, energy stocks, and industrial and communications companies among the index’s biggest drag. The sell off more than made up for the modest gain of the S&P 500 from the previous day.
The S&P 500 lost 25.68 points to 4,443.05. The Dow Jones Industrial Average lost 292.06 points, or 0.8%, to 34,577.57. The Nasdaq composite lost 67.82 points, or 0.45%, to 15,037.76.
Small businesses have fared less well than the market as a whole. The Russell 2000 Index slipped 30.80 points, or 1.4%, to 2,209.98.
The market had started higher after the latest inflation data was better than economists expected, but reversed within the first hour of trading, suggesting the report did not allay concerns of investors when it comes to inflation. On Friday, the government announced that US wholesale prices rose sharply in August.
“There are still inflationary pressures even if they [consumer prices] was below expectations, “said Kristina Hooper, chief global markets strategist at Invesco.” That doesn’t mean it’s over.
Consumer prices in the United States rose 0.3% lower than expected last month, the smallest increase in seven months. Still, the report follows an 8.3% annual increase in wholesale prices last month from August 2020, the largest annual gain since the Labor Department began calculating the 12-month number in 2010.
This wholesale-level pricing report was worse than expected, signaling problems for businesses facing higher costs, Hooper said. These costs could be passed on to consumers, but businesses unable to do so could see their revenues decline.
Inflation has been a major concern for investors, who are trying to assess how it will affect both the economic recovery and the Federal Reserve’s policy of keeping interest rates low. The central bank said higher costs for raw materials and consumer goods are likely to remain temporary as the economy recovers, but analysts fear the higher prices will persist and hurt corporate results while slashing prices. expenses.
Bond yields eased after the Labor Department report. The 10-year Treasury yield fell to 1.29% from 1.32% on Monday night. It had risen overnight to around 1.34% shortly before the report was released.
Falling bond yields have weighed on banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America fell 2.7% and JPMorgan fell 1.7%.
Wider concerns about inflation and rising prices have added to the choppy trade, along with lingering concerns about how the more contagious delta variant of covid-19 will affect an economy that still finds its place.
Elsewhere in the market, several companies have made great strides on a news mix.
Dietary supplement company Herbalife fell 21.1% after slashing its profit and revenue forecast. Wynn Resorts slipped 10.9% for the biggest drop in the S&P 500, fearing its Macau casinos could come under tighter scrutiny as China tries to tighten regulations across a wide range of sectors. Casino operator Las Vegas Sands also fell, closing down 9.8%.
Cable operator Comcast fell 7.3% after the company warned of a slowdown in the number of new cable customers.
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