A banner for Squarespace hangs at the New York Stock Exchange, Wednesday, May 19, 2021. The New York-based website-creation platform begins trading with a direct listing at the exchange Wednesday. (AP Photo/Mark Lennihan)
By Damian J. Troise and Alex Veiga
Stocks closed broadly lower on Wall Street Wednesday, extending the market’s downturn to a third day. The price of Bitcoin and other cryptocurrencies dropped sharply in a surge of selling. The S&P 500 lost 0.3%. Bitcoin’s price was down 7% to just over $40,000, according to the crypto news site Coindesk, having swung in a huge range of as low as $30,202 and as high as $43,621 over the past day. The stock of the digital currency exchange operator Coinbase, whose website went down briefly in the morning, fell almost 6% and is down sharply from its IPO just over a month ago.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Stocks fell broadly in afternoon trading Wednesday as the market's downturn entered a third day. Meanwhile the price of Bitcoin and other cryptocurrencies dropped sharply.
The S&P 500 index was down 1% as of 2:19 p.m. Eastern. The benchmark index is on track for its worst weekly loss in over two months. The Dow Jones Industrial Average was down 392 points, or 1.2%, to 33,675 points and the Nasdaq fell 0.8%.
Bank stocks were among the biggest decliners. Goldman Sachs fell 2.5% and Wells Fargo fell 2.2%. A range of retailers and other companies that rely directly on consumer spending were also posting sharp drops. Home Depot slid 1.3%, Gap fell 3.7% and L Brands dropped 4.5%.
Energy sector stocks, the biggest gainers so far this year, bore the heaviest losses as the price of U.S. crude oil skidded 3.5%.
Digital currencies were in freefall after China’s banking association issued a warning over the risks associated with digital currencies. A statement posted on the industry association’s website said all members should “resolutely refrain from conducting or participating in any business activities related to virtual currencies.”
Bitcoin’s price was down 10.5% to around $38,561, according to the crypto news site Coindesk, well below the recent high of over $63,000 it reached in mid-April. This comes after longtime Bitcoin advocate Tesla recently recently said it would no longer accept Bitcoin as payment for its cars, reversing its earlier position.
The selling was so intense that the web site of Coinbase, an online brokerage for digital currencies, was temporarily down in the morning. Coinbase's stock dropped 6.8%, and is now down about 35% from the peak it reached on April 16, just two days after its IPO.
Investors also continue to be focused on whether rising inflation will be temporary or whether it will endure. Prices are rising for everything from gasoline to food as the economy recovers from its more than year-long malaise.
The Federal Reserve expects that rising inflation will be temporary and related to the recovering economy, but investors are still uncertain and have been more cautious.
“That’s one of the things people are struggling with,” said J.J. Kinahan, chief strategist with TD Ameritrade. “They go to get gas and get in line at a grocery store and they see higher prices; there's this mixed message for the average investor.”
The fear is that the Federal Reserve will have to dial back its extensive support if inflation persists. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy. For all the worries about inflation, however, many professional investors are echoing the Federal Reserve in saying that they expect rising prices to be “transitory.”
Higher interest rates drag on most of the stock market, but they are particularly painful for stocks, especially technology shares, considered the most expensive and those bid up for profits expected far into the future.
Treasury yields were mostly higher. The yield on the 10-year Treasury note rose to 1.68% from 1.64% late Tuesday.
Target gained 5.5% after reporting strong results as consumers, some flush with U.S. stimulus payments, were eager to spend as the pandemic eases.
At-home medical labs company Getlabs raised $20 million in a Series A round, led by Emerson Collective and the Minderoo Foundation. Getlabs aims to be the boots-on-the-ground partner to telehealth. The company says more than 70% of medical decisions still require collecting diagnostic tests in person, and that it fills that void by delivering health care directly to their patients' homes. Founder & CEO of Getlabs Kyle Michelson joined Cheddar News' Closing Bell to discuss.
The White House laid out plans for a $5 billion investment into a national network of charging stations to ease EV driving anxiety. Bruce Brimacombe, CEO of EV infrastructure GOe3 joined Cheddar News to discuss how much needs to be done for drivers to get over the fear of running out of energy. "People need to be able to do what they're doing now," he said. "But that is the way that if you're going to buy an electric car, you got to feel like you're not changing your world." Brimacombe noted that building out the infrastructure between cities was GOe3's own focus.
U.S. automakers are saying that the blockade of the Ambassador Bridge, a crucial border crossing between the U.S. and Canada, is affecting their production lines. Michelle Krebs of Cox Automotive warns that the disruption "couldn't come at a worst time," amid chip and labor shortages in Detroit.
AND DETROIT-BASED AUTO MAKERS SAY THEY ARE SHUTTING DOWN PLANTS OR SCALING BACK PRODUCTION BECAUSE OF PARTS SHORTAGES.
Sonos reported better than expected Q1 earnings amid chip shortage with the release of its Roam product. CFO Brittany Bagley joined Cheddar News to discuss the smart speaker maker's successful report and its plans to hit its 2024 targets as people leave their homes as pandemic restrictions ease. "Even as people head out in the world, it doesn't mean they don't like to listen to music at home or watch a streaming movie at home," she said. "So there's still a real role for us and our products in peoples lives, sort of, no matter what else they're doing."
Lynn Martin, president of the NYSE Group, explains why investors at the New York Stock Exchange should still feel confident despite the recent Wall Street volatility and discusses the landscape for 2022 when it comes to IPOs and retail investors.
The merger of WarnerMedia and Discovery received Justice Department approval on Wednesday, and Patty Hirsch, EVP of consumer and digital platforms at WarnerMedia, joined Cheddar News to discuss current and future offerings from the media conglomerate that will control both HBO Max and Discovery+. "Content really drives so much, and CNN has always had a very long history of creating an incredible documentaries, incredible content … and this service I think is going to ultimately provide the kind of content consumers want and the kind of content that consumers are going are going to pay for," she said. Hirsch also discussed NFTs in use through its Turner Sports and DC brands.
Black entrepreneurs lead the way in the creation of new businesses, but they often cannot get the necessary funding to get their business off the ground. The Fearless Fund is on a mission to change that, and help Black business owners get venture capital. The fund also offers a unique grant program meant to help entrepreneurs with growth, peer coaching, and more, including grants between $10,000 and $20,000. Arian Simone, Co-Founder and General Partner of Fearless Fund, joins Closing Bell to discuss the Fund's mission, how it helps Black entrepreneurs, and more.
Multinational food company Kellogg’s reported an earnings beat amid supply chain issues and an extended labor strike. Kellogg’s Chairman and CEO c joined Cheddar News to discuss overcoming the obstacles and what's to come for the company. "The first half of the year is really going to be one about rebuilding inventory, and into the second quarter, starting to reestablish promotional activity for our customers and our consumers," Cahillane said. "And then the back half of the year, obviously, we're really much more back in business, and we expect to exit the year with our business in cereal being just as strong as it's ever been."
Sting has sold his catalog of more than 600 songs for $300 million to Universal Music. The deal gives the label the rights to all of his work, including “Every Breath You Take," as well as all future royalties.
Miller Lite is opening the first branded bar in the metaverse, by way of Decentraland, as a way to advertise during the Super Bowl this year without buying an expensive TV commercial slot. Sofia Colucci, global vice president of Miller Family of Brands, joined Cheddar to talk about the new marketing concept. "We have a lot of great partnerships with NFL teams throughout the year but were shut out of advertising during the Super Bowl game, so this pushes us to think creatively and also think of what feels really relevant right now," Colucci said. "There's no question that there's a lot of excitement with the metaverse, and we wanted to participate but in a way that felt right for Miller Lite."
