Stocks open lower, further erasing summer gains

Stocks are down on Wall Street on Thursday morning, extending their losing streak to a fifth day as investors remain wary of the resilience of the economy as the Federal Reserve raises interest rates to fight the inflation.

The S&P 500 was down 1% at 10:11 a.m. Eastern. The Dow Jones Industrial Average fell 230 points, or 0.7%, to 31,285 and the Nasdaq composite slipped 1.4%.

The main indexes have closed lower for four days in a row. The latest wave of selling continues an area of ​​weakness that wiped out much of the gains the market made in July and early August.

Technology stocks again represented the heaviest weighting in the market. Nvidia fell 8.3% after the chipmaker said the US government imposed new licensing requirements on its sales to China.

Banks also lost ground. Energy stocks fell along with the price of US crude oil, which just experienced its third month of decline. These losses eclipsed modest gains in communications stocks.

Smaller company stocks also fell, dragging the Russell 2000 Index down 1.7%. In Europe, major equity indices were down overall, while Asian markets closed lower.

Treasury yields were higher overall. The 10-year Treasury yield, which influences interest rates on mortgages and other consumer loans, rose to 3.26% from 3.20% on Wednesday evening. The two-year Treasury yield, which tends to track expectations for Fed action, rose to 3.52% from 3.50%.

Bond yields rose alongside expectations of higher interest rates, which the Federal Reserve raised in a bid to crush the highest inflation in decades.

Markets have been on a losing streak since last week, when Federal Reserve Chairman Jerome Powell indicated that the central bank will likely have to keep interest rates high enough to slow the economy “for a while. to bring down inflation.

The Fed has already raised interest rates four times this year and is expected to raise short-term rates by 0.75 percentage points at its next meeting later this month, according to CME Group.

Wall Street fears that the Fed is putting the brakes on an already slowing economy too hard and pushing it into a recession. Rising interest rates have also hurt investment prices, especially for more expensive stocks like technology companies.

The S&P 500 ended August with a 4.2% loss after jumping 9.1% in July on optimism that the Fed might be able to slow rate hikes following the signs that inflation, although still high, was stabilizing. The July and early August market rally marked a brief positive turn for Wall Street after a weak first half where the S&P 500 fell 20% from its most recent peak and entered a bear market.

Investors are watching economic data closely for any further signs of the economy slowing down or inflation slowing or at least staying at its current level. Businesses and consumers have been hit hard by rising prices for everything from food to clothing, but recent drops in gasoline prices have brought some relief.

Strong US jobs data helped fuel expectations of further interest rate hikes. The Labor Department announced on Tuesday that there were two jobs for every unemployed person in July, giving arguments to Fed officials who argue the economy can tolerate more rate hikes to tame inflation that is at its peak. highest for several decades.

On Thursday, the Labor Department said jobless claims fell last week, the latest sign the labor market is continuing to shine despite the slowing U.S. economy.

The government’s August jobs report, due out on Friday, is also expected to show that the labor market remains robust.

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