Wall Street Slips as Markets Worldwide Pull Back

NEW YORK (AP) -- Wall Street is slipping Wednesday and edging back from a rally that had sent it roaring 16% higher for the year so far.

The S&P 500 was 0.3% lower in early trading and stepped down from its highest level since April 2022. The Dow Jones Industrial Average was down 131 points, or 0.4%, at 34,286, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.2% lower.

U.S. stocks fell with other markets around the world following the latest discouraging signal from China's economy. Growth in China's services industry slowed by more than economists expected last month. It's the latest evidence showing the world's second-largest economy is stumbling in its recovery following the removal of anti-COVID restrictions.

The U.S. economy, meanwhile, has remained stronger than many investors feared. It's defied predictions for a recession because of a job market that's remained remarkably solid despite much higher interest rates meant to bring down inflation.

Hope is rising that inflation is cooling enough to get the Federal Reserve to soon stop its hikes to rates, which undercut inflation by slowing the entire economy. The Fed may offer some clues about its next moves later this afternoon, when it releases the minutes from its latest meeting.

At that meeting, the Fed decided to hold rates steady. It was the first time in more than a year that it refrained from hiking rates, but it also hinted it may push through two more increases by the end of 2023.

Yields were mixed in the bond market ahead of the release of the minutes. The yield on the 10-year Treasury edged up to 3.87% from 3.86% Monday, when bond trading ended early ahead of the Independence Day holiday. The 10-year yield helps set rates for mortgages and other important loans.

The two-year Treasury yield, which moves more on expectations for the Fed, fell to 4.89% from 4.94%.

On Wall Street, shares of UPS fell 2% as the company tries to reach a deal with the Teamsters union representing about 340,000 of its workers. Their current contract expires at the end of the month, and Teamsters members last month voted in favor of a strike authorization.

Companies that do a lot of business in the China region were also weak. Las Vegas Sands and Wynn Resorts, which get significant chunks of revenue from Macau, both fell at least 3%.

In stock markets abroad, indexes slumped 1.6% in Hong Kong and 0.7% in Shanghai following the discouraging economic data from China. That added to worries about high tensions between China and the United States, the world's two largest economies.

Beijing this week announced restrictions on exports of gallium and germanium, two metals used in making semiconductors and solar panels. That came ahead of Treasury Secretary Janet Yellen's visit this week as part of U.S. efforts to restore strained relations.

Stocks fell 0.3% in Japan, 0.6% in South Korea, 0.8% in France and 0.6% in Germany.