Stocks drift lower, extending losses into fourth straight week

Stocks closed lower on Wall Street on Tuesday, extending the market‘s losses into a shortened holiday week.

The S&P 500 fell 0.4% after recovering between a 0.5% gain and a 1% loss. The Dow Jones Industrial Average fell 0.6% and the Nasdaq lost 0.7%.

Major indices are emerging from their third consecutive week of losses, part of a late summer slump that wiped out much of the benchmark S&P 500’s July and early August gains.

Stocks have lost ground as the US Federal Reserve has indicated it will not raise interest rates quickly to bring down the highest inflation in decades.

Additionally, Wall Street is grappling with worries about a looming energy crisis in Europe and the impact it could have on the global economy and corporate earnings, as companies in the S&P 500 derive half of their earnings from abroad, said market strategist Michael Antonelli bei Baird.

“Every day that goes by that we have to talk about an energy crisis or gas shortages or runaway electricity bills in Europe, the less the market can move forward constructively,” he said.

The S&P 500 fell 16.07 points to 3,908.19. The Dow fell 173.14 points to 31,145.30 while the Nasdaq fell 85.96 points to 11,544.91.

Smaller company stocks fell more than the broader market. The Russell 2000 Index fell 17.42 points, or 1%, to 1,792.32.

Technology and communications stocks were among the biggest losers. Intel fell 2.8% and Netflix fell 3.4%.

Bed Bath & Beyond fell 18.4% after the death of its chief financial officer. The company is suffering from a continuing slump in sales and turnover at management level.

The company that Trump Media plans to list, Digital World Acquisition, plunged 11.4% after reports it had not received enough shareholder support for an extension to complete the deal.

ADT rose 16.4% after State Farm announced it would take a 15% stake in the home security company.

Markets in the US were closed on Monday for the Labor Day holiday.

Trading began Tuesday on the New York Stock Exchange after Ukrainian President Volodymyr Zelenskyy practically rang the opening bell. He advocated a program to attract major investment to his country as it continues to fight Russian forces.

Markets have slipped in recent weeks as inflation remains hot and the Federal Reserve remains on course to raise interest rates further in an attempt to tame persistently high prices. The big concern is that the Fed could go too far in raising rates and apply the brakes too hard on an already slowing economy, potentially causing a recession.

Wall Street has been watching economic data closely for signs that inflation may be easing, which traders hope will give the Fed a reason to ease rate hikes. The Fed has raised rates four times this year and is expected to raise short-term rates by another 0.75 percentage point at its next meeting later this month, according to CME Group.

“There’s now a fairly consistent view that the Fed will be higher for longer and err on the side of inflation reduction versus jobs and growth,” said Mark Hackett, Nationwide’s head of investment research.

Bond yields rose. The 10-year Treasury yield, which drives interest rates on mortgages and other loans, rose to 3.34% from 3.19% late Thursday. The two-year Treasury yield, which tends to follow expectations for Fed action, rose to 3.51% from 3.39%.

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