Stocks Close Lower Again Thursday 10/06 16:14
A choppy day of trading ended with stocks broadly lower on Wall Street
Thursday, though indexes have managed to hold onto most of their sizeable gains
from a big rally at the start of the week.
(AP) -- A choppy day of trading ended with stocks broadly lower on Wall
Street Thursday, though indexes have managed to hold onto most of their
sizeable gains from a big rally at the start of the week.
The S&P 500 fell 1% after having been up 0.4% in the early going. The
benchmark index is up 4.4% for the week following its best two-day rally since
the spring of 2020.
The selling was widespread, with roughly 80% of the stocks in the S&P 500
ending in the red. The Dow Jones Industrial Average fell 1.1%, while the Nasdaq
composite lost 0.7%. The Russell 2000 index of smaller company stocks closed
Treasury yields gained ground and put more pressure on stocks. The yield on
the 10-year Treasury, which helps set rates for mortgages and many other kinds
of loans, rose to 3.81% from 3.75% late Wednesday. The yield on the two-year
Treasury, which more closely tracks expectations for Federal Reserve action,
rose to 4.22% from 4.14% late Monday.
Investors were reviewing the latest data on jobs, which showed more
Americans filed for unemployment benefits last week. Traders will be watching
closely on Friday when the government releases its monthly job market data.
The labor market remains strong in the face of persistent inflation and a
slowing overall U.S. economy. That's good for job hunters, but could give the
Federal Reserve more reason to keep raising interest rates in its bid to crush
inflation. Wall Street is eager for definitive signs that inflation is on the
wane and the central bank can finally ease back on its rate hikes.
"We still have very, very hot inflation, and there's nothing slowing the Fed
anytime soon," said Paul Kim, CEO of Simplify ETFs. "And the market's just
waiting for clarity. And that's why you're seeing a little bit of choppiness,
but no real clear direction."
The S&P 500 fell 38.76 points to 3,744.52. The Dow dropped 346.93 points to
close at 29,926.94. The Nasdaq slid 75.33 points at 11,073.31. The Russell 2000
fell 10.18 points to 1,752.51.
Technology, financial and health care stocks were among the biggest weights
on the market. Intel dropped 1.7%, Citigroup fell 1.8% and Johnson & Johnson
Energy stocks mostly rose as the price of U.S. crude oil increased 0.8%.
Marathon Oil gained 3.9%.
Shares in cannabis companies surged following a late-afternoon announcement
by the White House that President Biden is pardoning thousands of Americans
convicted of "simple possession" of marijuana under federal law.
Biden also directed the secretary of Health and Human Services and the U.S.
attorney general to review how marijuana is scheduled under federal law. It is
currently classified as a Schedule I drug, alongside heroin and LSD.
Rescheduling the drug would reduce or potentially eliminate criminal penalties
Tilray Brands, MedMen Enterprises, Curaleaf and Trulieve Cannabis were among
the cannabis stocks that jumped at least 30%. These and most other cannabis
stocks remain deeply in the red for the year, however.
Wall Street is watching employment data very closely as the Fed remains
determined to raise interest rates to try and tame the hottest inflation in
four decades. Investors are concerned that the Fed could go too far with its
rate increases and push the economy into a recession.
New U.S. government data showed that more Americans filed for unemployment
benefits last week, the largest number in four months.
The job market has been a particularly strong area of an otherwise slowing
economy. Any sign that it's weakening could factor into the the Fed's future
decisions to either remain aggressive or ease up. Government employment data
released on Tuesday indicated that the job market may be cooling. A more
closely watched monthly employment report, for September, will be released on
Wall Street analysts expect the government to report that the U.S. economy
added 250,000 jobs last month, well below the average of 487,000 a month over
the past year, but still a strong number that suggests the labor market is
healthy despite chronic inflation and two straight quarters of U.S. economic
More broadly, the global economy has also been hit hard by record inflation
and lingering uncertainty over Russia's invasion of Ukraine. That conflict
continues to hang over energy costs worldwide, but especially for Europe. The
International Monetary Fund is once again lowering its projections for global
economic growth in 2023 and said the risks of a recession are rising.
Investors will soon get more information on just how hard inflation is
squeezing businesses and consumers when companies start reporting their
third-quarter financial results this month. More importantly, Wall Street will
be listening closely to what executives say about expectations for the
remainder of the year and into 2023.