NEW YORK — Another volatile day on Wall Street ended with more losses for stocks on Thursday, bringing the S&P 500 closer to its first bear market since the pandemic began.
The index, a benchmark for many funds, fell 0.6% after mitigating a deeper fall. The latest decline came a day after the S&P 500 suffered its biggest decline in nearly two years. It is now down 18.7% from the all-time high reached earlier this year and sits almost at the 20% threshold that defines a bear market.
The Dow Jones Industrial Average fell 0.8% and the Nasdaq 0.3%.
Indices have remained mired in a deep slump as investors worry that soaring inflation hurting people shopping and filling up their cars could also hurt US corporate profits. The target fell again, a day after losing a quarter of its value due to a surprisingly large drop in profits.
The latest pullback is further indication “that the market is trying to find direction,” said Lindsey Bell, chief market and currency strategist at Ally Invest. “There’s still a significant amount of uncertainty, particularly around what the (Federal Reserve) is going to do, how it’s going to affect growth going forward, and additionally, where the hell inflation is going- will she leave here.”
The S&P 500 fell 22.89 points to 3,900.79. The Dow fell 236.94 points to 31,253.13. The Nasdaq slipped 29.66 points to 11,388.50. All three indices are poised to extend a streak of at least six weekly losses.
Small company stocks held up better than the broader market. The Russell 2000 rose 1.38 points, or 0.1% to 1,776.22.
Rising interest rates, high inflation, war in Ukraine and a slowing Chinese economy have caused investors to reconsider the prices they are willing to pay for a wide range of stocks, from tech companies high-flying to traditional automakers. Investors worry that soaring inflation that hurts people shopping and filling up their cars will also hurt corporate profits.
Target fell another 5.1% on the day after losing a quarter of its value on a surprisingly weak earnings report.
Wall Street is also worried about the Federal Reserve’s plan to tackle the highest inflation in four decades. The Fed is raising interest rates aggressively and investors fear the central bank could cause a recession if it raises rates too high or too quickly.
The 10-year treasury fell back to 2.85% from 2.88% late Wednesday, but generally rose as investors brace for a market with higher interest rates. It has also pushed up mortgage rates, contributing to a slowdown in home sales.
The pile of worries on Wall Street led to very choppy trading and big swings between gains and losses on any given day.
Tech stocks have been among the most volatile holdings. The sector includes heavyweights like Apple that have high valuations, which tends to push the market more forcefully up or down. The sector was particularly affected by the Fed’s policy change aimed at raising interest rates. Low rates help support investments considered riskier, such as tech stocks, and higher rates reduce the incentive to take that risk.
Tech stocks tumbled on Thursday, accounting for much of the S&P 500’s decline. Cisco Systems fell 13.7% after the router and switch vendor cut its profit forecast due to blockchain constraints. ‘supply. Synopsis jumped 10.3% after the software company raised its financial forecast for the year.
Household goods companies, grocery store operators and food producers overall fell. General Mills fell 2.1% and Clorox 5.3%.
Retailers and other businesses that rely on direct consumer spending have mostly grown. Amazon added 0.2% and Expedia climbed 5.3%. Bath & Body Works fell 6.8% after it cut its profit forecast for the year.
With the S&P 500 closing slightly lower, the index is now closer to falling into a bear market. The last bear market occurred just two years ago, after the virus pandemic began.
Why use a bear to denote a market crash? Bears are hibernating, so they represent a declining market, said Sam Stovall, chief investment strategist at CFRA. In contrast, Wall Street’s nickname for a booming stock market is a bull market, because the bulls are charging.
Veiga reported from Los Angeles.
US could be heading for recession next year, other experts say