The Wall St. street sign is framed by the American flags flying outside the New York Stock exchange, Friday, Jan. 14, 2022, in the Financial District. (AP Photo/Mary Altaffer)
By Damian J. Troise
Stocks closed broadly lower on Wall Street Wednesday and deepened the weekly losses for major indexes following another choppy day of trading.
The major indexes bounced between gains and losses throughout the day, with technology stocks again giving direction to the broader market. The sector has triggered much of the choppiness in the market as investors shift money in expectation of rising interest rates. Higher rates make shares in high-flying tech companies and other expensive growth stocks relatively less attractive.
“We’ve seen some givebacks from the returns we got last year,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors. “What we’re seeing is that the market is resetting now.”
The S&P 500 fell 44.35 points, or 1%, to 4,532.76, with 77% of stocks in the benchmark index losing ground. The only sectors that closed with gains were utilities and household goods makers, signaling a shift to less risky investments for traders.
The Dow Jones Industrial Average fell 339.82, or 1.2%, to 35,028.65.
The tech-heavy Nasdaq fell 166.64, or 1.1%, to 14,340.26 and is now 10.7% below the all-time high it set on Nov. 19.
Technology giant Apple shed 2.1% and chipmaker Nvidia fell 3.2%.
Every major index set new lows for the year for the second day in a row.
Small company stocks, a gauge of confidence in economic growth, fell more than the rest of the market. The Russell 2000 index fell 33.44 points, or 1.6%, to 2,062.78.
Gold prices, which often rise when investors are nervous about risks in the broader market, gained 1.6%.
Bond yields fell. The yield on the 10-year Treasury fell to 1.85% from 1.87% late Tuesday.
Stocks have slid in January as investors gauge how rising inflation will impact businesses and consumers, along with the Federal Reserve’s next move on interest rate policy.
Investors are busy reviewing the latest round of corporate earnings. Health insurer UnitedHealth Group rose 0.3% after reporting encouraging financial results. Bank of America rose 0.4% after reporting a jump in profits that beat analysts' forecasts.
Household and consumer goods company Procter & Gamble rose 3.4% after also reporting strong financial results. The maker of Dawn dish detergent and other products reported strong results as it passed along higher costs to consumers.
Outside of earnings, Ford slumped 7.9% following news that it’s recalling about 200,000 cars in the U.S. to fix a problem that can stop the brake lights from turning off.
Wall Street is closely watching the latest round of results to gauge whether inflation is cutting into profit margins for companies and to see whether consumers are accepting the higher prices without cutting back on spending. Demand for goods has outpaced companies' capacity to make and supply products, which has caused supply chain problems and raised raw materials costs.
Economists expect inflation to remain high until those supply chain issues are solved and consumer demand is tempered. Meanwhile, the Federal Reserve is speeding up its withdrawal of support for markets and the economy. The central bank is likely to raise interest rates earlier and more often than had been expected to fight rising inflation.
As of late Tuesday, investors were pricing in a better than 86% probability that the Fed will raise short-term rates at its meeting of policymakers in March. A month ago, they saw less than a 47% chance of that, according to CME Group.
More big company earnings are on tap for Wall Street on Thursday. American Airlines, Union Pacific, CSX and Netflix will all report their latest financial results.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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