US stocks end mixed a day after Dow entered bear market

A wobbly trading day on Wall Street ended with a mixed end for U.S. stock indices on Tuesday as markets falter amid worries about a possible recession.

The trading volatility comes a day after a broad selloff sent the Dow Jones Industrial Average into a bear market, joining other major U.S. indices.

The S&P 500 slid 0.2%, its sixth consecutive decline. The benchmark was up 1.7% at the start before a mid-afternoon pullback. The Dow Jones fell 0.4%, while the Nasdaq composite finished with a 0.2% gain.

Major indexes remain in a prolonged slump. With just a few days left in September, stocks are heading for another losing month as markets fear higher interest rates used to fight inflation could push the economy into a recession.

“The market is pricing in slower near-term growth right now due to rising interest rates and inflation which has been consistently higher for longer than expected,” said Lindsey Bell, head of markets and currency strategist. at Ally Invest.

The S&P 500 fell 7.75 points to 3,647.29. The Dow fell 125.82 points to 29,134.99. The Nasdaq gained 26.58 points to 10,829.50.

The S&P 500 fell about 8% in September and has been in a bear market since June, when it fell more than 20% below its all-time high set on Jan. 4. The Dow’s decline on Monday put it in the same company as the benchmark and the tech-heavy Nasdaq.

Central banks around the world have raised interest rates in a bid to make borrowing more expensive and quell the highest 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 is now in a range of 3% to 3.25%. It was almost nil at the start of the year.

The Fed also released a forecast suggesting that its benchmark rate could be 4.4% by the end of the year, one percentage point higher than it was looking at in June.

Wall Street fears that the Fed is putting the brakes on an already slowing economy too hard and pushing it into a recession. Higher interest rates have weighed on stocks, especially more expensive tech companies, which tend to look less attractive to investors as rates rise.

Losses from homeware manufacturers, communications companies and utilities outpaced gains elsewhere in the market. Procter & Gamble fell 2.7%, Disney 2.3% and Edison International 2.9%.

Energy stocks gained ground as U.S. oil prices rose 2.3%. Exxon Mobil rose 2.1%.

Small company stocks held up better than the broader market. The Russell 2000 added 6.63 points, or 0.4%, to close at 1,662.51.

Bond yields were mostly higher on Tuesday. The 2-year Treasury yield, which tends to track Federal Reserve action expectations, fell to 4.31% from 4.34% late Monday. It is trading at its highest level since 2007. The 10-year Treasury yield, which influences mortgage rates, rose from 3.93% to 3.98%.

Fears of a recession have grown as inflation remains stubbornly high. Investors will be watching the next round of corporate earnings very closely to get a better idea of ​​how companies are handling inflation. Companies will start publishing their latest quarterly results in early October.

Investors are also closely watching the latest economic updates. Consumer confidence remains strong, despite rising prices for everything from food to clothing. The Conference Board’s latest September consumer confidence report showed confidence was even stronger than economists expected.

The government will release its weekly report on unemployment benefits on Thursday, along with an updated report on gross domestic product for the second quarter. On Friday, the government will release another personal income and spending report that will help provide more detail on where and how inflation is hurting consumer spending.

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