by Damien J Trois and Alex Viega
Wall Street capped a rough trading day on Wednesday with a mixed end for major stock indexes, as technology and communications companies weighed in on the market for the second day in a row.
The S&P 500 gained 0.2% after gaining 0.8%. The benchmark index gained marginally a day after recording its worst fall since May. The index is on the cusp of its first monthly loss since January.
The Dow Jones Industrial Average also lost momentum as the day climbed, but gained 0.3%, while the tech-heavy Nasdaq Composite gave back 0.2% after up 0.9% in the opening round.
Bond yields stabilized over the past week after a buoyancy and markets, especially technology stocks, weighed on. The high returns have forced investors to reevaluate whether prices are too high for the shares, as it makes them look expensive by comparison.
The broader market has lost ground in September, leaving the S&P 500 down 3.6% for the month with one day left. Investors have spent much of the month reviewing a mixed batch of economic data showing the impact of COVID-19 and the highly contagious delta variant on consumer spending and recovery in the job market.
Wall Street is still trying to figure out how persistent rising inflation will be as the economy works through and eventually recovers from the pandemic. The Fed has said higher inflation will likely be temporary and linked to an economic recovery, but more companies have indicated they expect higher costs. Bond yields started rising last week after the central bank indicated that it may initiate action in the coming months to provide some support to the economy during the pandemic.
“Today there’s a tug of war between which is the big concern: is it inflation or is it rates?” Randy Frederick, vice president of trading and derivatives at Charles Schwab. “Today’s action tells me we don’t know.”
The S&P 500 closed 6.83 points higher at 4,359.46. The Dow rose 90.73 points to 34,390.72, while the Nasdaq fell 34.24 points to 14,512.44. The Russell 2000 Index of Small Companies also closed down 4.47 points, or 0.2%, at 2,225.31.
The yield on the 10-year Treasury, which is used to determine interest rates on many types of loans, is held at 1.53%.
A mix of health care companies and companies focused on consumer products accounted for a large portion of the gains in the S&P 500. Eli Lilly rose 4% and Procter & Gamble added 1%.
Investors are still watching the Federal Reserve closely to see how a slowdown in economic growth will affect the pace of its plan, eventually trimming bond purchases to help keep interest rates low.
Wall Street is also eyeing Washington, where Democrats and Republicans in Congress are wrestling to raise the country’s debt ceiling. If the limit, which is the limit on the amount of money the federal government can borrow, is not raised by October 18, the country will face “a financial crisis and an economic downturn,” Treasury Secretary Janet Yellen told Congress on Wednesday. Told.
Yellen’s remarks came a day after Senate Republicans stopped considering a bill that would have raised the debt limit.
The impasse is starting to worry Wall Street, Frederick said.
“I expect the market to become more volatile and probably how close we get to that time frame,” he said.
Wall Street is also preparing for the next round of corporate earnings in the next few weeks. Investors will get a more detailed look at how supply chain problems and high costs are affecting corporate finance.
A wide range of companies have been warning investors about the impact of inflation on costs and profits. Nike, Costco and FedEx are among those that cited material costs, shipping delays and labor problems as concerns.
Sherwin-Williams became the latest company to warn that higher raw material costs would hurt profits. The stock gained 0.8% as investors quickly took to the announcement, but it is still down 9.6% from its September 2 high of $308.70.
Markets in Asia fell mostly while those in Europe gained.