Wall Street Steadies After Selloff 10/04 10:00
Wall Street is holding steadier in mixed trading Wednesday after reports
suggested the U.S. economy may be cooling.
NEW YORK (AP) -- Wall Street is holding steadier in mixed trading Wednesday
after reports suggested the U.S. economy may be cooling.
The S&P 500 was 0.1% higher in morning trading, coming off a 1.4% tumble
that had sent it to its lowest level in four months. The Dow Jones Industrial
Average was down 52 points, or 0.2%, a day after wiping out its gains for the
year so far. The Nasdaq composite was 0.4% higher, as of 10:15 a.m. Eastern
Stocks have struggled since the summer under the weight of soaring Treasury
yields in the bond market, which have touched their highest levels in more than
a decade. High yields undercut stock prices by pulling investment dollars away
from stocks and into bonds. They also crimp corporate profits by making
borrowing more expensive.
The yield on the 10-year Treasury, which is the centerpiece of the bond
market, pulled back from its highest level since 2007, down to 4.76% from 4.80%
late Tuesday. Shorter- and longer-term yields also eased a bit to offer more
oxygen to the stock market.
Yields fell and then pared their losses following a couple mixed reports on
the economy. The first indicated hiring by employers outside the government was
weaker last month than expected.
On Wall Street currently, the hope is for a cooling job market because that
could mean less upward pressure on inflation. That in turn could convince the
Federal Reserve to take it easier on interest rates.
After already hiking its main interest rate to the highest level since 2001,
the Fed has indicated it may keep rates higher next year than it had earlier
expected. Treasury yields have correspondingly snapped higher as traders accept
a new normal for markets of high rates for longer.
The Fed is paying particular attention to the job market because too much
strength there could drive wages for workers much higher, which it fears could
keep inflation well above its target of 2%.
Wednesday's report from ADP suggested private employers added 89,000 jobs
last month, a much sharper slowdown in hiring than the 140,000 that economists
The report doesn't have a perfect track record in predicting what the more
comprehensive jobs report from the U.S. government says. That will arrive on
But "if Friday's report also shows the labor market is cooling, stock
investors may worry a little less about indefinitely higher interest rates,"
said Mike Loewengart, head of model portfolio construction at Morgan Stanley
Global Investment Office.
A second report on the economy said that growth for businesses in the U.S.
services industry slowed in September by a touch more than economists expected.
It also offered some hints of sticky pressure on inflation, with prices paid
by services companies rising last month at a similar rate as in August.
Oil prices eased Wednesday to take some heat off inflation. Benchmark U.S.
crude fell 2.9% to $86.64 per barrel. It's been pulling back since topping $93
last week. Brent crude, the international standard, lost 2.8% to $88.40.
Prices for crude have been generally charging higher from $70 during the
summer following announcements of cuts to production by some oil-producing
Wall Street is also absorbing the ouster of Kevin McCarthy as the speaker of
the House of Representatives. The unprecedented move to remove a speaker from
the position likely doesn't change much in the short term, with funding for the
U.S. government set until Nov. 17.
"That said, a leadership vacuum in the House raises the odds of a government
shutdown when the current funding extension expires," according to economists
at Goldman Sachs.
A shutdown would drag on the U.S. economy, raising the risk of a recession,
though financial markets have held up relatively well through past shutdowns.
On Wall Street, Big Tech stocks were helping to support the market after
leading it lower a day earlier. They tend to move more sharply with
expectations for rates because high-growth stocks are seen as some of the
biggest victims of high yields.
Microsoft rose 0.8% and was the biggest single force pushing upward on the
S&P 500 because of its massive size. Amazon rose 1.3%, and Tesla gained 2.1%.
On the losing end of Wall Street were big oil-and-gas companies, which fell
with the price of crude. Exxon Mobil dropped 2.7%, Chevron lost 2.8% and
ConocoPhillips slid 2.9%.
Cal-Maine tumbled 7.4% after the egg producer reported a sharp drop in
profit for its latest quarter from a year earlier. The company said egg prices
have returned "to more normalized levels" from their record highs as the
industry recovers from the most recent outbreak of highly pathogenic avian
In markets abroad, stock indexes were modestly lower across much of Europe.
Asian stocks tumbled more, coming off the prior day's sharp losses from Wall
Street. Tokyo's Nikkei 225 index sank 2.3%, South Korea's Kospi dropped 2.4%
and Hong Kong's Hang Seng slipped 0.8%.