Stocks fall broadly on Wall Street as inflation worries grow

Oct 13, 2022, 10:47 PM | Updated: Oct 15, 2022, 8:31 am
A person wearing a protective mask walks in front of an electronic stock board showing Japan's Nikk...

A person wearing a protective mask walks in front of an electronic stock board showing Japan's Nikkei 225 index at a securities firm Friday, Oct. 14, 2022, in Tokyo. Asian stock markets surged Friday after Wall Street rebounded from a slump caused by worse-than-forecast inflation numbers. (AP Photo/Eugene Hoshiko)

(AP Photo/Eugene Hoshiko)

More worries about inflation helped spur a broad slide for stocks Friday that left most of the major indexes on Wall Street in the red for the week and wiped out much of the market’s gains from a strong rally a day earlier.

A report showing U.S. consumers raised their expectations for future inflation hurt markets worldwide, offering another signal the Federal Reserve may have to continue aggressively hiking interest rates to temper stubbornly hot inflation. The strategy raises the risk of a recession.

The S&P 500 fell 2.4% after having been up as much as 1.2% in the early going. The Dow Jones Industrial Average fell 1.3% and the Nasdaq composite ended 3.1% lower. Both indexes also turned lower after marching higher in early trading.

Trading has been unsettled all week and was especially volatile on Thursday after a government report showed that inflation remains very hot. Major U.S. indexes staged their biggest comeback in years on Thursday in a reversal from steep morning losses.

“I don’t think that (the rally) technically or fundamentally means anything because a whole lot hasn’t changed,” said Sylvia Jablonski, chief investment officer at Defiance ETFs. “I don’t think we’re likely to see any sense of direction or stability in the near term.”

Investors have been looking for any sign that could allow the Fed to eventually ease up on its interest rate increases. Fed Chair Jerome Powell has said Americans’ expectations for future inflation plays a big role in setting interest rates, because a runaway there could create a much more dangerous, self-fulfilling spiral.

The central bank has already raised its benchmark interest rate five times this year, with the last three increases by three-quarters of a percentage point. Wall Street expects another raise of three-quarters of a percentage point at its next meeting in November.

Inflation, though cooling in some areas of the economy, remains stubbornly hot overall. A survey from the University of Michigan on Friday showed that consumers raised their expectations for future inflation. It also showed that overall consumer confidence remains surprisingly strong despite high prices on a wide range of goods.

“Core inflation is running at levels that are too high, and the University of Michigan’s numbers today show that it is starting to feed into consumers’ expectations, and that’s almost exactly to a ‘T’ what the Fed would like to avoid,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.

The S&P 500 fell 86.84 points to 3,583.07. The Dow dropped 403.89 points to 29,634.83. The Nasdaq slid 327.76 points to close at 10,321.39.

Small company stocks also fell sharply. The Russell 2000 gave up 46.01 points, or 2.7%, to close at 1,682.40.

Bond yields rose after the Michigan report. The yield on the 10-year Treasury, which influences mortgage rates, rose to 4.02% from 3.86% shortly before the report came out. It’s trading near its highest level since 2008.

The yield on the 2-year Treasury, which tends to track expectations for future Fed action, rose to 4.51% from 4.40% just before the report came out.

Investors also focused on the latest earnings reports for more clues about how companies are dealing with inflation.

Several big banks were bright spots in the market. JPMorgan Chase rose 1.7% after reporting earnings and revenue that topped Wall Street forecasts. Wells Fargo rose 1.9% after it reported strong revenue.

UnitedHealth Group rose 0.6% after raising its profit forecast for the year.

More than 90% of the stocks in the S&P 500 closed in the red. Technology stocks were biggest weights on the index. Chipmaker Nvidia fell 6.1%.

U.S. crude oil prices fell 3.9% and weighed down energy stocks. Chevron fell 3.1%.

Markets in Europe closed higher after British Prime Minister Liz Truss has abandoned a planned cut to corporation taxes, scrapping a key part of an economic plan that set off weeks of market and political turmoil.

A government report showed that the pace of sales at U.S. retailers was unchanged in September from August as rising prices for rent and food chipped away at money available for other things. The report was worse than economists anticipated.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Associated Press

Today in History: December 4, the “Million Dollar Quartet”

Today in History Today is Sunday, Dec. 4, the 338th day of 2022. There are 27 days left in the year. Today’s Highlights in History: On Dec. 4, 1956, Elvis Presley, Johnny Cash, Jerry Lee Lewis and Carl Perkins gathered for the first and only time for a jam session at Sun Records in Memphis. […]
23 hours ago
A Palestinian flag and a poster showing Ammar Adili, 22, who was shot and killed by an Israeli bord...
Associated Press

Palestinians say killing caught on video was unjustified

HAWARA, West Bank (AP) — A makeshift sidewalk memorial with a Palestinian flag and a mourning notice paid tribute Saturday to a 22-year-old Palestinian whose death at the hands of an Israeli border police officer — four pistol shots from close range — was captured on widely shared amateur video. A day after the shooting […]
23 hours ago
FILE - A flu vaccine is readied at the L.A. Care and Blue Shield of California Promise Health Plans...
Associated Press

Flu season worsens as 44 states report high activity

NEW YORK (AP) — The U.S. flu season keeps getting worse. Health officials said Friday that 7.5% of outpatient medical visits last week were due to flu-like illnesses. That’s as high as the peak of the 2017-18 flu season and higher than any season since. The annual winter flu season usually doesn’t get going until […]
23 hours ago
Secretary of Defense Lloyd Austin introduces the B-21 Raider stealth at Northrop Grumman Friday, De...
Associated Press

Keep COVID military vaccine mandate, defense chief says

ABOARD A U.S. MILITARY AIRCRAFT (AP) — Defense Secretary Lloyd Austin said he wants to keep the military’s COVID-19 vaccine mandate in place to protect the health of the troops, as Republican governors and lawmakers press to rescind it. This past week more than 20 Republican governors sent a letter to President Joe Biden asking […]
23 hours ago
Associated Press

Family says coyote attacked toddler outside LA home

LOS ANGELES (AP) — A coyote ambushed and injured a 2-year old girl outside her Los Angeles home in a daytime attack before her father chased the animal off, her family said. Home security video obtained by KTLA-TV shows the animal grab and drag the toddler across her lawn and sidewalk, just seconds after her […]
23 hours ago
FILE -  Rep. Jim Kolbe, R-Ariz, speaks during a press conference at the American University of Beir...
Associated Press

Longtime Arizona GOP Rep. Jim Kolbe dies at 80

PHOENIX (AP) — Jim Kolbe, a Republican congressman who represented a heavily Democratic region of Arizona for more than two decades and was a proponent of gay rights, has died. He was 80. Arizona Gov. Doug Ducey said in a statement that Kolbe died Saturday. Ducey ordered flags lowered until sunset Sunday. Kolbe served in […]
23 hours ago

Sponsored Articles

(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
(Photo via MLB's Arizona Fall League / Twitter)...
Arizona Fall League

Top prospects to watch at this year’s Arizona Fall League

One of the most exciting elements of the MLB offseason is the Arizona Fall League, which began its 30th season Monday.
...
Day & Night Air Conditioning, Heating and Plumbing

Ways to prevent clogged drains and what to do if you’re too late

While there are a variety of ways to prevent clogged drains, it's equally as important to know what to do when you're already too late.
Stocks fall broadly on Wall Street as inflation worries grow