Wall Street Edges Back From Its Record Highs
NEW YORK (AP) -- U.S. stocks edged back from their records Wednesday as financial markets around the world took a pause following big recent moves.
The S&P 500 slipped 0.2% a day after setting an all-time high for the 41st time this year. The Dow Jones Industrial Average dropped 293 points, or 0.7%, after likewise setting a record the day before, while the Nasdaq composite edged up by less than 0.1%.
Treasury yields ticked higher in the bond market after sinking the prior day on a surprisingly weak update on confidence among U.S. consumers. The worst drop in three years raised worries about the U.S. economy's strength, but it also raised expectations for the Federal Reserve to deliver another dose of bigger-than-usual relief through a big cut to interest rates at its next meeting.
The drop may also not be as bad as it looks, at least for financial markets. The worst losses in confidence have been concentrated among lower-income households, who have had to put more purchases on credit cards, according to Jack Ablin, chief investment officer at Cresset. But when it comes to the economy, and potential profits for companies, top earners account for more spending on non-essentials, and their confidence appears to be holding up better.
In stock markets abroad, indexes moved more modestly after jumping the day before on hopes that new stimulus measures from China would prop up the world's second-largest economy. Chinese indexes rose again Wednesday, but they pared their gains as the day progressed, while European indexes slipped. Prices for crude oil also gave back gains.
On Wall Street, Stitch Fix tumbled 39.5% after the online fashion styling service said its revenue in the current quarter could be 15% to 17% weaker than a year earlier. Its stock has dropped below $3 from $100 early in the pandemic.
KB Home fell 45.4% after reporting profit for the latest quarter that was just shy of analysts' expectations. The homebuilder, though, said orders picked up in August as mortgage rates came down.
A separate report released Wednesday morning said sales of new homes across the country slowed in August, but not by as much as economists feared.
The next date on the calendar circled for a potentially big market move is next week, when the latest monthly update on the U.S. job market will arrive. Slowing hiring in the world's largest economy has become the top concern among investors, now that inflation has eased significantly from its peak two summers ago.
While the number of layoffs remains relatively low, U.S. employers are also more hesitant to hire. Critics worry the job market could weaken further as the cumulative effects of all the past hikes to interest rates made by the Federal Reserve show themselves.
The Fed kept its main interest rate at a two-decade high for more than a year in hopes of slowing the U.S. economy enough to stifle inflation. Last week, it swung toward protecting the job market by cutting the federal funds rate by a larger-than-usual half of a percentage point. Critics say it may be moving too late.
A strong job market would help Cintas, which provides uniforms, fire extinguishers and other products to businesses. It rose 1.2% after reporting stronger profit for the latest quarter than analysts expected. Cintas also increased its forecasts for profit and revenue over the full fiscal year.
Trump Media & Technology Group jumped 10.5% for its first back-to-back gain in two weeks. The stock had been struggling amid speculation about whether former President Donald Trump would sell some of his shares in the company behind the Truth Social network, now that he is free to do so.
All told, the S&P 500 fell 10.67 points to 5,722.26. The Dow dipped 293.47 to 41,914.75, and the Nasdaq composite added 7.68 to 18,082.21.
In the bond market, the yield on the 10-year Treasury rose to 3.78% from 3.73% late Tuesday. The two-year yield, which moves more closely with expectations for the Fed, rose to 3.56% from 3.54%.
Traders are betting on a roughly 60% probability the Federal Reserve will deliver another cut of half of a percentage point at its next meeting in November, according to data from CME Group. The Fed has traditionally moved rates by only a quarter of a percentage point at a time.
In stock markets abroad, indexes rose 1.2% in Shanghai, fell 1.3% in South Korea and slipped 0.2% in London.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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