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ASX 200 expected to fall again​


The Australian share market looks set to fall heavily again on Monday. According to the latest SPI futures, the ASX 200 is expected to open the day 68 points or 0.9% lower this morning. This follows a disappointing end to the week on Wall Street, which saw the Dow Jones fall 0.5%, the S&P 500 drop 0.9%, and the Nasdaq tumble 0.9%.
 

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https://apnews.com/article/business-asia-tokyo-hong-kong-shanghai-b52fc25ad8c51f726bd2fb3f75de6fa9

Stocks drop the most since May on worries over China, Fed

By DAMIAN J. TROISE, STAN CHOE and ALEX VEIGA

Stocks on Wall Street closed sharply lower Monday, mirroring losses overseas and handing the S&P 500 index its biggest drop in four months.

Worries about heavily indebted Chinese real estate developers — and the damage they could do to investors worldwide if they default — rippled across markets. Investors are also concerned that the U.S. Federal Reserve could signal this week that it’s planning to pull back some of the support measures it’s been giving markets and the economy.

The S&P 500 fell 75.26 points, or 1.7%, to 4,357.73, it’s biggest drop since May. At one point, the benchmark index was down 2.9%, the biggest decline since last October. The S&P 500 was coming off two weeks of losses and is on track for its first monthly decline since January. The S&P 500 has gone an unusually long time without a pullback of 5% or more.

The Dow Jones Industrial Average fell 614.41 points, or 1.8%, to 33,970.47. The blue-chip index was briefly down 971 points. The Nasdaq fell 330.06 points, or 2.2%, to 14,713.90. The Hang Seng, Hong Kong’s main index, dropped 3.3% for its biggest loss since July. European markets fell about 2%.

“What’s happened here is that the list of risks has finally become too big to ignore,” said Michael Arone, chief investment strategist at State Street Global Advisors. “There’s just a lot of uncertainty at a seasonally challenging time for markets.”

The worries over Chinese property developers and debt have recently centered on Evergrande, one of China’s biggest real estate developers, which looks like it may be unable to repay its debts.

The fear is that a potential collapse there could send a chain reaction through the Chinese property-development industry and spill over into the broader financial system, similar to how the failure of Lehman Brothers inflamed the 2008 financial crisis and Great Recession. Those property companies have been big drivers of the Chinese economy, which is the world’s second-largest.

If they fail to make good on their debts, the heavy losses taken by investors who hold their bonds would raise worries about their financial strength. Those bondholders could also be forced to sell other, unrelated investments to raise cash, which could hurt prices in seemingly unrelated markets. It’s a product of how tightly connected global markets have become, and it’s a concept the financial world calls “contagion.”

Many analysts say they expect China’s government to prevent such a scenario, and that this does not look like a Lehman-type moment. Nevertheless, any hint of uncertainty may be enough to upset Wall Street after the S&P 500 has glided higher in almost uninterrupted fashion since October.

Besides Evergrande, several other worries have been lurking underneath the stock market’s mostly calm surface. In addition to the Fed possibly announcing that it’s letting off the accelerator on its support for the economy, Congress may opt for a destructive game of chicken before allowing the U.S. Treasury to borrow more money and the COVID-19 pandemic continues to weigh on the global economy.

Regardless of what the biggest cause for Monday’s market swoon was, some analysts said such a decline was due. The S&P 500 hasn’t had even a 5% drop from a peak since October, and the nearly unstoppable rise has left stocks looking more expensive and with less room for error.

All the concerns have pushed some on Wall Street to predict upcoming drops for stocks. Morgan Stanley strategists said Monday that conditions may be ripening to cause a fall of 20% or more for the S&P 500. They pointed to weakening confidence among shoppers, the potential for higher taxes plus inflation to eat into corporate profits and other signs that the economy’s growth may slow sharply.

Even if the economy can avoid that worse-than-expected slowdown, Morgan Stanley’s Michael Wilson said stocks could nevertheless drop about 10% as the Fed pares back on its support for markets. The Fed is due to deliver its latest economic and interest rate policy update on Wednesday.

Earlier this month, Stifel strategist Barry Bannister said he expects a drop of 10% to 15% for the S&P 500 in the final three months of the year. He cited the Fed’s tapering of its support, among other factors. So did Bank of America strategist Savita Subramanian, as she set a target of 4,250 for the S&P 500 by the end of the year. That would be a 4.1% drop from Friday’s close.

Technology companies led the broader market lower. Apple fell 2.1% and chipmaker Nvidia dropped 3.6%.

Banks posted big losses as bond yields slipped. That hurts their ability to charge more lucrative interest rates on loans. The yield on the 10-year Treasury fell to 1.31% from 1.37% late Friday. Bank of America fell 3.4%.

Oil prices fell 2.3% and weighed down energy stocks. Exxon Mobil fell 2.7%.

Smaller company stocks were among the biggest losers. The Russell 2000 fell 54.67 points, or 2.4%, to 2,182.20.

Airlines were among the few bright spots. American Airlines rose 3% to lead all the gainers in the S&P 500. Delta Air Lines rose 1.7% and United Airlines added 1.6%.

Cryptocurrency traders also had a rough day. The price of Bitcoin fell nearly 8% to $43,717, according to Coindesk.

Investors will have a chance for a closer look at how the slowdown affected a wide range of companies when the next round of corporate earnings begins in October. Solid earnings have been a key driver for stocks, but supply chain disruptions, higher costs and other factors could make it more of a struggle for companies to meet high expectations.

“The market’s biggest strength this year could become its biggest risk,” Arone said.

ASX 200 expected to sink again

The Australian share market is expected to sink again on Tuesday. According to the latest SPI futures, the ASX 200 is poised to open the day 98 points or 1.4% lower.

This follows a poor start to the week on Wall Street. The Dow Jones fell 1.78%, the S&P 500 sank 1.7%, and the Nasdaq dropped 2.19%.


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https://apnews.com/article/business-china-japan-asia-tokyo-915c588ed46e4403aff86f0466f06214

After a wobbly day, major indexes end mixed on Wall Street

By DAMIAN J. TROISE and ALEX VEIGA

A late-afternoon burst of buying on Wall Street faded in the final minutes of trading Tuesday, leaving the major stock indexes mixed.

The S&P 500 slipped 0.1% after spending much of the day wavering between small gains and losses. The modest pullback followed the benchmark index’s biggest drop in four months a day earlier.

Roughly 66% of stocks in the S&P 500 fell, with industrial, communication and financial companies accounting for much of the drop. Bond yields mostly rose. The price of U.S. crude oil also rose.

For parts of the afternoon the market had looked like it would recoup some of the losses it took in Monday’s big sell-off, but by the closing bell even those gains had mostly fizzled. The market’s uneven showing came as investors looked ahead to Wednesday afternoon, when the Federal Reserve is set to deliver its latest economic and interest rate policy update.

“It’s a bit of a pause and the market is waiting for the Federal Reserve to see what they have to say tomorrow,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management.

The S&P 500 fell 3.54 points to 4,354.19, while the Dow Jones Industrial Average dropped 50.63 points, or 0.1%, to 33,919.84. The Nasdaq composite rose 32.49 points, or 0.2%, to 14,746.49.

Small company stocks also managed gains. The Russell 2000 index rose 3.98 points, or 0.2%, to 2,186.18.

European markets closed broadly higher, while Asian markets mostly rose. Chinese markets remained closed for a holiday.

The yield on the 10-year Treasury edged higher to 1.32% from 1.31% late Monday.

The market sell-off on Monday was prompted in part by worries about heavily indebted Chinese real estate developers and the damage they could do if they default and send ripple effects through markets. That added to a wide range of concerns hovering over investors, including the highly contagious delta variant as well as higher prices squeezing business and consumers.

Wall Street is also gauging how the recovery’s slowdown will impact the Fed’s policies that have helped support the market and economy. The central bank will release a policy statement on Wednesday, which will be closely watched for any signals on how it will eventually reduce its bond purchases that have helped keep interest rates low.

Health care stocks led the gainers Tuesday. Johnson & Johnson rose 0.4% after reporting that a booster of its one-shot coronavirus vaccine provides a stronger immune response months after people receive a first dose.

Technology companies, which led the broad sell-off Monday, regained some ground. Chipmaker Advanced Micro Devices rose 1.6%.

Several companies made solid gains after giving investors encouraging financial updates. Ride-hailing company Uber jumped 11.5% after telling investors that it could post an adjusted profit this quarter. Equipment rental supplier Herc Holdings rose 6.7% following a solid long-term growth forecast.

Supply chain problems, which have been hurting a broad range of industries, weighed on several companies. Homebuilder Lennar fell 0.5% after home deliveries for the third quarter fell short of analysts’ forecasts because of supply chain problems.

Restaurant operator Cracker Barrel fell 2.7% after reporting weak fiscal fourth-quarter financial results.

Universal Music jumped 35.7% in its debut on Amsterdam’s stock exchange.

ASX 200 futures pointing lower

The Australian share market is expected to drop on Wednesday. According to the latest SPI futures, the ASX 200 is poised to open the day 11 points or 0.15% lower.

This follows a disappointing night on Wall Street which saw the Dow Jones fall 0.15%, the S&P 500 drop 0.08%, but the Nasdaq rise 0.22%. US markets roared back in early trade but ultimately gave back their gains.

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https://apnews.com/article/business-japan-asia-tokyo-economy-e9d527f97b5e587abb98f0fef4f4ca59

Stocks hold their gains on Wall Street after Fed statement

By DAMIAN J. TROISE, ALEX VEIGA and STAN CHOE

Markets in South Korea and Hong Kong were closed for holidays.

Stocks on Wall Street closed broadly higher Wednesday after the Federal Reserve signaled it may begin easing its extraordinary support measures for the economy later this year.

The central bank said it may start raising its benchmark interest rate sometime next year, earlier than it envisioned three months ago. It also said it will likely begin slowing the pace of its monthly bond purchases “soon” if the economy keeps improving. The Fed’s been buying the bonds throughout the pandemic to help keep long-term interest rates low.

The S&P 500 rose 1%, breaking a four-day losing streak. The benchmark index initially climbed 1.4% after the Fed’s issued its statement at 2 p.m. Eastern.

The other major indexes also received a bump, but shed some of their gains by late afternoon. The Dow Jones Industrial Average rose 338.48 points, or 1%, to 34,258.32. The blue-chip index briefly surged 520 points higher. The Nasdaq composite gained 150.45 points, or 1%, to 14,896.85.

Bond yields mostly rose. The yield on the 10-year Treasury note wobbled up and down after the Fed’s announcement, but wound up little changed at 1.31% from 1.32% late Tuesday. The yield influences interest rates on mortgages and other consumer loans.

Wall Street analysts said the Fed’s policy update was in line with what the market was expecting. The VIX, which measures how much volatility investors expect for the S&P 500, sank about 14% after the Fed statement.

“This was so well telegraphed that it didn’t take anybody by surprise,” said Brian Jacobsen, senior investment strategist at Wells Fargo Asset Management.

At a news conference, Federal Reserve Chair Jerome Powell said the Fed plans to announce as early as November that it will start to taper its monthly bond purchases, should the job market maintain its steady improvement.

The Fed’s shift revealed that inflation is starting to be a concern, said Gene Goldman, chief investment officer at Cetera Financial Group.

“Our concern is that the Fed keeps sticking to its view that this is a transitory phase, but we aren’t seeing evidence that this is transitory,” he said.

Goldman added that the broader market could be in for a correction as economic growth slows and rising inflation persists. “Our concerns about the overall economy and market is that number one, we’re at peak everything,” he said.

Wall Street has been trying to gauge how the slowdown in the economic recovery will affect the Fed’s decision-making process. The broader market has been choppy as that question lingers amid rising cases of COVID-19 because of the highly contagious delta variant and the impact of rising inflation on companies and consumers.

History doesn’t offer a great guide for how markets will react to the Fed’s easing its support for the economy, mostly because it’s been such a rare occurrence. But the market’s movements around them can seem counterintuitive.

Consider the summer of 2013, when Treasury yields jumped sharply after the Fed’s chair at the time hinted it may begin slowing its bond-buying program. Investors were taken by surprise and assumed rate increases would also quickly follow. That drove the yield on the 10-year Treasury up to 3% from less than 2.20% within three months.

But after the Fed’s official announcement that it would taper its purchases finally arrived in December, the 10-year yield quickly made a U-turn and began falling again. That’s even though the Fed was reducing its support for a program meant to keep rates low. Analysts say that shows how much power the Fed has through signaling: a taper can mean less help is on the way for the economy, which can mean slower growth and inflation.

Through all the bond market’s turmoil of 2013, stock prices remained relatively steady.

What makes this situation different from 2013 is the bond market hasn’t had a taper tantrum. The 10-year yield has been relatively steady between 1.20% and 1.30% since July, after falling from 1.70% in March. Powell has repeatedly stressed how gradual the Fed will be in moving from tapering its bond purchases to raising interest rates.

More than 80% of stocks in the S&P 500 index rose Wednesday. Technology stocks, banks and companies that rely on direct consumer spending accounted for much of the gains. Energy stocks posted solid gains as the price of U.S. crude oil rose 2.4%. Communication and utilities stocks fell.

Smaller stocks did better than the broader market. The Russell 2000 index rose 32.38 points, or 1.5%, to 2,218.56.

Netflix climbed 3.1% after the streaming entertainment service acquired the works of Roald Dahl, the late British author of celebrated children’s books such as “Charlie and the Chocolate Factory.”

Facebook fell 4% and tempered gains for communications stocks after the social network told advertisers in a blog post that it has been underreporting web conversions by Apple mobile device users by roughly 15% following changes to Apple’s operating system.

FedEx slumped 9.1%, the biggest decline among S&P 500 stocks, after it reported sharply higher costs even as demand for shipping increased. A wide range of industrial and other companies have been dealing with higher costs because of a mix of labor and supply chain problems.

Meanwhile, Wall Street may have reason to feel less worried about heavily indebted Chinese real estate developers and the damage they could do if they default and send ripple effects through markets. Evergrande, one of China’s biggest private sector conglomerates, said it will make a payment due Thursday, potentially easing some of those concerns.

European markets closed mostly higher and Asian markets were mixed. Markets in South Korea and Hong Kong were closed for holidays.

ASX 200 expected to rise

The Australian share market looks set to rise on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 16 points or 0.2% higher this morning.

This follows a strong night of trade on Wall Street, which saw the Dow Jones rise 1%, the S&P 500 climb 0.95%, and the Nasdaq jump 1.02%.


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https://apnews.com/article/health-china-asia-australia-business-ea1fbf2086236f5355071c42f545b82e

Another rally on Wall Street erases losses for the week

By DAMIAN J. TROISE and ALEX VEIGA

Stocks on Wall Street rallied for the second straight day Thursday and have now reversed the market’s sharp pullback at the start of the week.

The S&P 500 rose 1.2%, with more than 85% of companies in the benchmark index notching gains. The Dow Jones Industrial Average gained 1.5% and the Nasdaq rose 1%.

The rally put the major indexes on pace for weekly gains just four days after a broad sell-off handed the S&P 500 its biggest skid since May and knocked the Dow more than 600 points lower.

The market’s sharp swing from Monday, when the S&P 500 slumped 1.7%, to Thursday, when it closed with 0.4% gain for the week, reflects how quickly investor sentiment can change, and is another example of how in a market that’s near all-time highs, traders tend to see waves of selling as buying opportunities.

Monday’s sell-off was triggered by concerns about the potential for a default by Evergrande, a huge, debt-laden private Chinese real estate developer. Traders also were feeling uneasy about how quickly the Federal Reserve might elect to rein in some of the support measures it’s been giving the markets and economy.

Those worries were allayed by Wednesday, when the Federal Reserve signaled it wouldn’t begin considering such a tapering of support before at least November, and indicated it may start raising its benchmark interest rate sometime next year. Investors also got reassuring news out of China, where Evergrande said it would make a payment due Thursday on a domestic bond.

“The last few days have just been this recognition that all the things that were being talked about, the market has shrugged them off,” said Michael Antonelli, managing director and market strategist at Baird, noting that the S&P 500 is only about 1.5% below its all-time high set earlier this month.

“The market was just ripe for a sell-off,” on Monday, Antonelli said. “We still have not had a 5% pullback from the highs yet this year.”

After its two-day policy meeting concluded Wednesday, the Fed said it will likely begin slowing the pace of its monthly bond purchases “soon” if the economy keeps improving. The Fed and other central banks have been buying bonds throughout the pandemic to help keep long-term interest rates low.

“The reality is that the Fed is going to err on side of not tightening anything on inflation until they absolutely have to,” said Brent Schutte, chief investment strategist, Northwestern Mutual Wealth Management Company. “They are going to stick around as long as they possibly can.”

Still, markets have had a rough September and investors could be in for more choppiness as they work through a mix of concerns, Schutte said. That includes COVID-19 and its lingering impact on the economy, along with a slow recovery for the employment market.

“People got so used to a one-way market,” he said. “It’s going to be more of two-way market and investors need to get used that, but I still think the trend is higher.”

The change in investor sentiment has also put oil prices in the green. Benchmark U.S. crude oil is now up 1.2% for the week.

Bond yields moved solidly higher. The yield on the 10-year Treasury rose to 1.43% from 1.32% late Wednesday, a big move.

All told, the S&P 500 index rose 53.34 points to 4,448.98. The Dow gained 506.50 points to 34,764.82, while the Nasdaq rose 155.40 points to 15,052.24.

Technology companies and banks led the way higher Thursday. Cloud-based software company Salesforce.com was a standout with a 7.2% gain after raising its sales forecast for the year. Citigroup rose 3.9%.

Small-company stocks, which are typically a good measure of investor confidence for economic growth, also jumped over to the winning column. The Russell 2000 rose 40.48 points, or 1.8%, to 2,259.04. It’s up 1% for the week.

Other standouts included Olive Garden owner Darden Restaurants. Its stock jumped 6.1% after delivering strong quarterly results.

European and Asian markets rose.

ASX 200 expected to rise

The Australian share market looks set to end the week on a positive note. According to the latest SPI futures, the ASX 200 is expected to open the day 7 points or 0.1% higher this morning.

This follows a very strong night on Wall Street, which saw the Dow Jones jump 1.48%, the S&P 500 rise 1.21%, and the Nasdaq storm 1.04% higher


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Stocks end mixed on Wall Street, S&P 500 manages weekly gain

By DAMIAN J. TROISE and ALEX VEIGA

Wall street closed out a choppy week of trading Friday with a mixed finish for the major stock indexes, though the S&P 500 managed its first weekly gain in three weeks.

The benchmark index rose 0.1% after spending much of the day wavering between small gains and losses. The Dow Jones Industrial Average also eked out a 0.1% gain, while the Nasdaq composite and the Russell 2000 index of small-company stocks fell.

Slightly more stocks in the S&P 500 rose than fell, with communication services companies and banks driving much of the increase. Health care and real estate stocks posted some of the biggest losses. The index ended with a 0.5% gain for the week.

The modest showing followed a two-day rally that helped erase a slump earlier in the week. Investors have been facing similar choppiness throughout September as they try to gauge how the economy will continue its recovery.

“The market today was sort of catching its breath after the sharp slump in the first two days of the week and the sharp advance in the second two days of the week,” said Sam Stovall, chief investment strategist at CFRA.

The S&P 500 rose 6.50 points to 4,455.48 and is now within 1.9% of the all-time high it set Sept. 2. The Dow added 33.18 points to 34,798. The Nasdaq slipped 4.54 points, or less than 0.1%, to 15,047.70, while the Russell 2000 dropped 10.97 points, or 0.5%, to 2,248.07.

Markets have had a rough September and investors could be in for more choppiness as they work through a mix of concerns, including COVID-19 and its lingering impact on the economy, along with a slow recovery for the employment market.

Traders did receive some clarity from the Federal Reserve this week. After its two-day policy meeting concluded Wednesday, the central bank said it will likely begin tapering the pace of its monthly bond purchases soon, but not before November, if the economy keeps improving. The Fed and other central banks have been buying bonds throughout the pandemic to help keep long-term interest rates low.

Bond yields have been headed higher the last couple of days following the Fed’s announcement. The yield on the 10-year Treasury rose to 1.46% Friday from 1.41% the day before. The yield, which influences interest rates on mortgages and other consumer loans, was at 1.31% late Monday.

“It could simply be that we had yields come down Monday and Tuesday in a flight to safety that is now being unwound,” Stovall said. “At the same time, bond investors have been given the clue, if you will, by the Fed, that tapering is right around the corner.”

Energy prices rose again Friday. The price of benchmark U.S. crude oil increased 0.9% and ended 2.9% higher for the week. The trend helped push up energy stocks. Cabot Oil & Gas rose 2.8%.

Nike was the latest company to warn investors about supply chain problems hurting revenue. Its stock slumped 6.3% for the biggest drop in the S&P 500. A wide range of industries face supply chain issues and that has investors worried about rising costs for businesses and consumers. Analysts have warned that the upcoming round of corporate earnings could be crimped because of those issues.

Worries over troubled Chinese real estate developer Evergrande are also weighing on sentiment. Some Chinese banks on Friday disclosed what they are owed by Evergrande, seeking to dispel fears of financial turmoil as it struggles under $310 billion in debt. Evergrande has said it negotiated details of an interest payment due Thursday to banks and other bondholders in China but gave no details. The company has yet to say whether it will make an $83.5 million payment that was due Thursday on a bond abroad.

Markets in Europe fell and markets in Asia were mostly lower, though Japan’s Nikkei 225 rose 2.1%.

Cryptocurrencies fell after China’s central bank declared all transactions involving virtual currencies illegal as it stepped up a campaign to block use of unofficial digital money. Bitcoin fell 4.8% to $42,525.48, according to Coindesk. Chipmaker Nvidia, which makes processors needed in crypto-mining, fell 1.8%.


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ASX 200 expected to edge higher

The Australian share market looks set to edge higher on Monday. According to the latest SPI futures, the ASX 200 is expected to open the day 2 points higher this morning.

This follows a subdued end to the week on Wall Street, which saw the Dow Jones rise 0.1%, the S&P 500 climb 0.15%, and the Nasdaq trade flat.
 

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Stocks end mixed as losses for Big Tech weigh on market

By DAMIAN J. TROISE and ALEX VEIGA

Wall Street’s major stock indexes ended mixed Monday as losses by technology and health care companies outweighed gains elsewhere in the market.

The S&P 500 fell 0.3% after spending much of the day essentially flat. The pullback ended a three-day winning streak for the benchmark index, which last week notched its first weekly gain in three weeks.

The tech-heavy Nasdaq composite fell 0.5%, while the Dow Jones Industrial Average managed a 0.2% gain. Small company stocks fared better than the broader market, sending the Russell 2000 index 1.5% higher.

Bond yields moved broadly higher. The 10-year Treasury yield rose to 1.49% from 1.46% late Friday. It was at 1.31% a week ago, as market jitters drove investors to shift money into bonds, which lowers their yield, but have been climbing since Tuesday.

Banks made solid gains as the 10-year Treasury yield rose. The yield influences interest rates on mortgages and other consumer loans, so when it rises it allows lenders to charge higher rates. Bank of America gained 2.7%.

“The story now is higher bond yields and what areas of the (stock) market benefit,” said Willie Delwiche, investment strategist at All Star Charts.

The S&P 500 fell 12.37 points to 4,443.11, the Nasdaq dropped 77.73 points to 14,969.97 and the Dow gained 71.37 points to 34,869.37. The Russell 2000 picked up 32.93 points to 2,281, a sign that investors are still confident about future economic growth.

Markets have had a choppy month so far and the S&P 500 is on pace to shed 1.8% in September, which would mark the first monthly loss since January. Investors have been trying to gauge just how much room the economy has to grow amid waves of COVID-19 crimping consumer spending and job growth while inflation remains a concern.

The economic recovery started strong in 2021, but analysts and economists have been tempering their forecasts for the rest of the year. In a survey being released Monday, the National Association for Business Economics found that its panel now expects full-year economic growth of 5.6%, down from a forecast for 6.7% growth in NABE’s previous survey in May. However, economists raised their forecast for 2022 economic growth to 3.5% from a previous outlook of 2.8%.

Consumer spending has been the key driver for the economic recovery and it has been crimped in part by rising cases of COVID-19 because of the highly contagious delta variant. Investors will get a glimpse into how that could continue to play out on Tuesday when The Conference Board releases its consumer confidence index for September.

Wall Street has been facing an otherwise quiet period for corporate news as companies prepare to start reporting their latest quarterly results in the next few weeks. The next round of corporate statements could give investors a better sense of the actual impact supply chain and labor disruptions are having on sales and profits.

Microsoft fell 1.7% and Apple gave back 1.1% as tech stocks helped drag down the S&P 500. The technology sector, which carries an outsized weight within the index, fell 1% overall.

Health care stocks also weighed on the market. Moderna dropped 5% and Abbot Laboratories lost 3.1%.

The price of benchmark U.S. crude oil rose 2% and supported gains for energy stocks. Exxon Mobil rose 3%.

Bank stocks have responded to the surge in bond yields. The KBW Bank Index has risen more than 9% in four days.

The exception Monday was Wells Fargo, which fell 0.8%. The bank settled its latest legal headache by agreeing to pay $37 million over allegations overcharged customers using its foreign exchange services.

The bank has been entangled in numerous scandals the past few years and is still operating under an order from the Federal Reserve that keeps Wells from growing any larger. Sen. Elizabeth Warren of Massachusetts issued a letter this month calling for Wells Fargo to be broken up, citing the bank’s inability to resolve its problems.

Markets in Europe edged higher while Asian markets were mixed.

ASX 200 expected to fall

The Australian share market is expected to fall on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 43 points or 0.6% lower.

This follows a mixed start to the week on Wall Street. The Dow Jones rose 0.21%, the S&P 500 fell 0.28%, and the Nasdaq dropped 0.52%.


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Spike in bond yields spooks investors, deflates tech stocks

By DAMIAN J. TROISE and ALEX VEIGA

Technology companies led a broad slide in stocks on Wall Street Tuesday, deepening the market’s September swoon.

The S&P 500 fell 2%, its worst drop since May. The tech-heavy Nasdaq dropped 2.8%, its biggest drop since March. Decliners outnumbered advancers on the New York Stock Exchange 4 to 1.

The benchmark S&P 500 is down 3.8% so far this month and on pace for its first monthly loss since January. The September slump has been an exception to a mostly steady stream of gains so far this year that has brought the S&P 500 up 15.9% since the beginning of 2021.

The selling came as a swift rise in Treasury yields forces investors to reassess whether prices have run too high for stocks, particularly the most popular ones. The yield on the 10-year Treasury note, a benchmark for many kinds of loans including mortgages, jumped to 1.54%. That’s its highest level since late June and up from 1.32% a week ago.

Bond yields started rising last week after the Federal Reserve sent the clearest signals yet that the central bank is moving closer to begin withdrawing the unprecedented support it has provided for the economy throughout the pandemic. The Fed indicated it may start raising its benchmark interest rate sometime next year and will likely begin cutting back the pace of its monthly bond purchases before the end of this year.

“All of that is taking one of the weights that had been holding yields low and removing it,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “That clearly has a big impact on larger cap, higher growth, higher multiple stocks.”

A rise in yields means Treasurys are paying more in interest, and that gives investors less incentive to pay high prices for stocks and other things that are riskier bets than super-safe U.S. government bonds. The recent upturn in rates has hit tech stocks particularly hard because their prices look more expensive than much of the rest of the market, relative to how much profit they’re making.

Many tech stocks also got bid up recently on expectations for big profit growth far in the future. When interest rates are low, an investor isn’t losing out on much by paying high prices for the stock and waiting years for the growth to happen. But when Treasurys are paying more in the meantime, investors are less willing.

The S&P 500 fell 90.48 points to 4,352.63. The Dow Jones Industrial Average fell 569.38 points, or 1.6%, to 34,299.99. The blue-chip index briefly fell 614 points.

Small company stocks also lost ground. The Russell 2000 index dropped 51.23 points, or 2.2%, to 2,229.78.

This week’s swoon for the market is reminiscent of an episode early this year when expectations for rising inflation and a stronger economy sent Treasury yields climbing sharply. The 10-year yield jumped to nearly 1.75% in March after starting the year around 0.90%. Tech stocks also took the brunt of that downturn.

Chipmaker Nvidia fell 4.4%, Apple slid 2.4% and Microsoft fell 3.6%. The broader technology sector has also been contending with a global chip and parts shortage because of the virus pandemic and that could get more severe as a power crunch in some parts of China shuts down factories.

Communications companies also weighed down the market. Facebook and Google’s parent company, Alphabet, each fell 3.7%.

Energy was the only sector in the S&P 500 that wasn’t in the red. Exxon Mobil rose 1% and Schlumberger gained 2.4% for the biggest gain among S&P 500 stocks.

Another lingering market worry resonating from China is the possible collapse of one of China’s biggest real estate developers. Evergrande Group is struggling to avoid a default on billions of dollars of debt.

Markets in Asia were mixed while markets in Europe fell.

Investors have been dealing with a choppy market in September as they try to gauge how the economic recovery will progress and how it will impact various industries.

COVID-19 remains a lingering threat and is still taking its toll on businesses and consumers. Economic data on consumer spending and the employment market has been mixed. U.S. consumer confidence declined for the third straight month in September, according to a report from The Conference Board.

Companies are warning that supply chain problems and higher prices could crimp sales and profits. The Federal Reserve has maintained that rising inflation is temporary and tied to those supply chain problems as the economy recovers from the pandemic. Investors are still concerned that higher inflation could be more permanent and rising bond yields reflect some of those worries.

“The bottom line is that the supply chain thesis is really being tested and the Fed, businesses and consumers have had to react to some of the on-the-ground realities,” said, Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

ASX 200 expected to sink again​

The Australian share market is expected to drop again on Wednesday. According to the latest SPI futures, the ASX 200 is poised to open the day 81 points or 1.1% lower.

This follows a very bad night on Wall Street which saw the Dow Jones fall 1.63%, the S&P 500 drop 2.04%, and the Nasdaq sink 2.83%. A spike in US bond yields due to rate hike bets spooked investors.

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S&P 500 clings to a modest gain as other indexes end mixed

By DAMIAN J. TROISE and ALEX VEIGA

Wall Street capped a wobbly day of trading Wednesday with a mixed finish for the major stock indexes, as technology and communication companies weighed on the market for a second straight day.

The S&P 500 rose 0.2% after shedding most of a 0.8% gain. The modest gain came a day after the benchmark index posted its worst drop since May. The index is on pace for its first first monthly loss since January.

The Dow Jones Industrial Average also lost momentum as the day went on, but managed a 0.3% gain, while the tech-heavy Nasdaq composite gave back 0.2% after having been up 0.9% in the early going.

Bond yields stabilized after surging over the past week and weighing on the market, especially technology stocks. The higher yields have forced investors to reassess whether prices have run too high for stocks, because 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 to go. Investors have spent much of the month reviewing a mixed batch of economic data that showed COVID-19 and the highly contagious delta variant’s impact on consumer spending and the employment market recovery.

Wall Street is still trying to gauge just how persistent rising inflation will be as the economy works through, and eventually recovers from, the pandemic. The Fed has said that higher inflation will likely be temporary and tied to the economic recovery, but more companies have signaled that they expect higher costs to linger. Bond yields began rising last week after the central bank signaled that it could begin taking action in coming months to curtail some of the support its been providing to the economy throughout the pandemic.

“Today is a sort of a tug-of-war between which is the bigger concern: is it inflation or is it rates?” said Randy Frederick, vice president of trading & derivatives at Charles Schwab. “Today’s action tells me we don’t know.”

The S&P 500 rose 6.83 points to 4,359.46. The Dow gained 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 fell, shedding 4.47 points, or 0.2%, to 2,225.31.

The yield on the 10-year Treasury, which is used to set interest rates on many kinds of loans, held at 1.53%.

Health care companies and a mix of companies that focus on consumer products accounted for a large share of the gains in the S&P 500. Eli Lilly rose 4% and Procter & Gamble added 1%.

Investors are still closely watching the Federal Reserve to gauge how the slowdown in economic growth will impact the speed of its plan to eventually trim the bond purchases it’s been making to helped keep interest rates low.

Wall Street also has its eye on Washington, where Democrats and Republicans in Congress are wrestling over extending the nation’s debt limit. If the limit, which caps the amount of money the federal government can borrow, isn’t raised by Oct. 18, the country “would likely face a financial crisis and economic recession,” Treasury Secretary Janet Yellen told Congress on Wednesday.

Yellen’s remarks came a day after Senate Republicans blocked consideration of a bill that would have raised the debt limit.

The standoff is beginning to worry Wall Street, Frederick said.

“I expect the market to get more volatile and possibly move lower commensurate with how close we get to that deadline,” 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 higher costs are impacting corporate finances.

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 have cited materials costs, shipping delays and labor problems as concerns.

Sherwin-Williams became the latest company to warn that higher raw materials costs will hurt profits. The stock gained 0.8% as investors took the announcement in stride, but it is still down 9.6% from its all-time high of $308.70 on Sept. 2.

Markets in Asia mostly fell while markets in Europe made gains.

ASX 200 expected to rise

The Australian share market looks set to rise on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 14 points or 0.2% higher this morning.

This follows a mixed night of trade on Wall Street, which saw the Dow Jones rise 0.29%, the S&P 500 climb 0.16%, and the Nasdaq fall 0.24%.

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S&P 500 fell 4.8% in September, worst month since March 2020

By DAMIAN J. TROISE and ALEX VEIGA

Stocks on Wall Street fell broadly Thursday, closing out September with their worst monthly loss since the beginning of the pandemic.

The S&P 500 ended the month 4.8% lower, its first monthly drop since January and the biggest since March 2020, when the viral outbreak rattled markets as it wreaked havoc with the global economy.

After climbing steadily for much of the year, the stock market became unsettled in recent weeks with the spread of the more contagious delta variant of COVID-19, a sudden spike in long-term bond yields and word that the Federal Reserve may start to unwind its support for the economy.

The S&P 500 fell 1.2% Thursday, after selling accelerated in the final hour of trading. The benchmark index is still up 14.7% for the year.

“It’s not really surprising that we’re seeing a weaker September because historically its the worst month on average,” said Jay Pestrichelli, CEO, of investment firm ZEGA Financial. “Unfortunately, there’s not a lot of information to glean for October from it.”

The S&P 500 fell 51.92 points to 4,307.54, and is now 5.1% below its all-time high set on Sept. 2. The September swoon cut into the index’s gains for the third quarter, leaving it only 0.2% higher. That’s its smallest quarterly gain since the pandemic first stunned the economy and financial markets.

The Dow Jones Industrial Average fell 546.80 points, or 1.6%, to 33,843.92, while the Nasdaq slid 63.86 points, or 0.4%, to 14,448.58. Small company stocks also lost ground. The Russell 2000 index fell 20.94 points, or 0.9%, to 2,204.37.

Bond yields edged lower. The yield on the 10-year Treasury note, a benchmark for many kinds of loans, fell to 1.50% from 1.54% from late Wednesday. It was as low as 1.32% just over a week ago.

All the sectors in the S&P 500 ended in the red Thursday, with technology stocks, banks and and a mix of companies that provide consumer goods and services accounting for much of the pullback. More than 90% of the stocks in the index fell.

The broader market stumbled through September as investors tried to get a clearer picture of the economy’s path amid inflation concerns and uncertainty about how COVID-19 will continue to impact industries and consumers. In recent weeks, economic data has revealed that the highly contagious delta variant has crimped consumer spending and the job market’s recovery.

The weak signals for economic growth continued Thursday as the Labor Department reported that unemployment applications rose for the third straight week and were higher than economists anticipated. The Commerce Department upgraded its estimate of economic growth during the second quarter to 6.7%, which was slightly better than economists expected, but they expect growth to slow to 5.5% during the third quarter.

Inflation concerns that had been weighing on the market earlier in the year returned in September as a wide range of companies issued more warnings about the impact of rising prices on their finances. Sherwin-Williams and Nike are among the many companies that have warned investors about supply chain problems, higher raw material costs and labor issues.

Inflation will likely remain the key worry hanging over the markets for the rest of the year, Pestrichelli said, and it could put the Federal Reserve in the tough position of having to raise rates earlier than anticipated.

Investors are still trying to gauge whether those issues are temporary and part of the economic recovery or could linger longer than expected. The upcoming round of corporate earnings reports could shed light on how companies are dealing with those problems.

“The jury is still out on this and we don’t really know if it’s demand-driven or supply-driven inflation,” Pestrichelli said. “If you end up getting lower growth and higher inflation, then you get stagflation and that’s no good for the market.”

Investors have also had their eyes on Washington, where Democrats and Republicans in Congress have been wrestling over extending the nation’s debt limit. On Thursday, a bill to fund the U.S. government through Dec. 3 and avoid a partial federal shutdown cleared Congress. Still, Congress’ dispute over whether to raise the government’s borrowing cap remains unresolved.

Treasury Secretary Janet Yellen has said that if the debt limit isn’t raised by Oct. 18, the United States probably will face a financial crisis and economic recession.

Several companies made outsized gains and losses following corporate news on Thursday. Virgin Galactic’s stock soared 12.1% after it was cleared to fly again following a Federal Aviation Administration inquiry. CarMax slumped 12.6% for the biggest drop in the S&P 500 after reporting disappointing fiscal second-quarter profits.

Homebuilders fell broadly following a report showing average long-term mortgage rates climbed this week above 3% for the first time since June. Mortgage rates tend to track the direction in the 10-year Treasury yield. The average rate for a 30-year mortgage rose to 3.01%, according to mortgage buyer Freddie Mac. The rate averaged 2.88% last week and a year ago.

Higher mortgage rates limit the purchasing power of homebuyers, potentially pricing out some would-be homeowners. LGI Homes fell 5.1% and PulteGroup slid 4.2%.

ASX 200 expected to tumble

The Australian share market looks set to give back a lot of yesterday’s gains on Friday. According to the latest SPI futures, the ASX 200 is expected to open the day 119 points or 1.6% lower this morning.

This follows a disappointing night of trade on Wall Street, which saw the Dow Jones sink 1.59%, the S&P 500 fall 1.19%, and the Nasdaq drop 0.44%.


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Stocks rebound but still close out worst week since winter

By STAN CHOE

Wall Street rebounded on Friday, led by companies that would benefit most from a healthier economy, but not by enough to keep the stock market from its worst week since the winter.

The S&P 500 rose 49.50, or 1.1%, to 4,357.04 following another choppy day of trading. It swung between a loss of 0.4% and a gain of 1.6% through the day.

The Dow Jones Industrial Average climbed 482.54 points, or 1.4%, to 34,326.46, and the Nasdaq composite gained 118.12, or 0.8%, to 14,566.70.

Merck helped pace the market and leaped 8.4% after it said its experimental pill to treat COVID-19 cut hospitalizations and deaths by half. Prospects for an additional tool to tame the pandemic helped lift shares of airlines, hotels and companies hurt by restrictions on travel and other activities.

United Airlines soared 7.9%, casino owner Caesars Entertainment swept 6.4% higher and Live Nation Entertainment jumped 8.3%.

Energy producers, financial companies and other businesses whose profits are often closely tied to the economy’s strength were also helping to lead the way.

The market’s widespread gains weren’t enough to make up for a dismal last few days. The S&P 500 still dropped to a weekly loss of 2.2%, its worst since February. A swift rise in interest rates earlier this week rattled the market and forced a reassessment of whether stocks had grown too expensive, particularly the most popular ones.

On Friday, the yield on the 10-year Treasury fell back to 1.46% from 1.52% late Thursday. That’s still well above its perch of 1.32% from a week and a half ago.

September was also the worst month for the S&P 500 since March 2020, when markets plunged as COVID-19 shutdowns took hold. Among the worries that have weighed on the market: The Federal Reserve is close to letting off the accelerator on its support for markets, economic data has recently been mixed following an upturn in COVID-19 infections, corporate tax rates may be set to rise and political turmoil continues in Washington.

There’s also high inflation still enveloping the world. Oil prices rose roughly 2% this week, approaching a seven-year high, while natural gas prices were up about 7%.

The Federal Reserve has said that it expects high inflation to be only transitory and that it’s the result of an economy roaring back to life from its earlier shutdown. But if it’s wrong, the Fed may have to raise interest rates earlier or more aggressively than it’s telegraphed to markets.

Economic reports on Friday were mixed. The nation’s manufacturing grew faster than expected last month, but an August reading for the Federal Reserve’s preferred measure for inflation was a bit higher than forecast. They follow a disappointing report on Thursday showing more people filed for unemployment benefits than expected.

Such data means “you hear the word ‘stagflation’ come up once in a while, which would be the worst outcome” said Rich Weiss, chief investment officer of multi-asset strategies at American Century Investments.

Stagflation is when economic growth stagnates but inflation remains high. Weiss doesn’t expect that to happen, so long as the pandemic doesn’t cause more global shutdowns, but he also is not positioning his investments as if he’s optimistic about big future gains for stocks.

“We’re not swinging at the pitch right now,” he said. “We are neutral.”

Weiss said the market would need to fall by about a third before he’d call stocks attractively valued based on where interest rates are now, all else equal.

Asian stock markets fell earlier in the day, despite Japan’s lifting of a pandemic state of emergency and a survey of large Japanese manufacturers showing sentiment at a nearly three-year high.

Japan’s Nikkei 225 index slumped 2.3%, and South Korea’s Kospi fell 1.6%.

European stock indexes also fell.


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ASX 200 expected to rebound


The Australian share market looks set to bounce back on Monday. According to the latest SPI futures, the ASX 200 is expected to open the day 52 points or 0.7% higher this morning.

This follows a strong end to the week on Wall Street, which saw the Dow Jones rise 1.4%, the S&P 500 climb 1.15%, and the Nasdaq trade 0.8% higher.

Public holidays

Trading volumes on the ASX 200 are expected to be much lower today due to much of Australia being off work for public holidays. For several Australian states, today is Labour Day. And for Queensland, it is observing the Queen’s Birthday today.
 

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Stocks fall as tech retreats; price of oil hits 7-year high

By DAMIAN J. TROISE and ALEX VEIGA

Technology companies led a broad slide for stocks on Wall Street Monday, as rising bond yields and energy prices stoked investors’ concerns about higher inflation.

The S&P 500 fell 1.3%, the Dow Jones Industrial Average dropped 0.9% and the tech-heavy Nasdaq lost 2.1%.

The price of oil hit a seven-year high as OPEC and allied oil producers stuck with a plan to cautiously raise production even as global demand for crude oil increases.

Treasury yields, which moved sharply higher last week, rose again. The recent jump has contributed to weakness in technology stocks. Apple fell 2.5% and Microsoft dropped 2.1%.

Big communication companies also fell. Facebook slid 4.9% a day after a former employee told “60 Minutes” that the company has consistently chosen its own interests over the public good. The social network and its Instagram and WhatsApp platforms also suffered a worldwide outage that began around midmorning on Monday.

“What you’re seeing today is those areas — the expensive, growth technology type of areas — that had led over the past few months as interest rates remained low are now reversing as you’re seeing interest rates move higher,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.

The S&P 500 fell 56.58 points to 4,300.46. The decline follows the benchmark index’s worst week since winter and a 4.8% pullback for September, the S&P 500′s first monthly loss since January.

The Dow Jones Industrial Average dropped 323.54 points to 34,002.92. The Nasdaq lost 311.21 points to 14,255.48.

Small company stocks also fell. The Russell 2000 index gave up 24.16 points, or 1.1%, to 2,217.47.

U.S. crude oil prices rose 2.3% and topped $77 per barrel for the first time since 2014. OPEC and allied oil producing countries on Monday decided to stay with their cautious approach to restoring oil production slashed during the pandemic, agreeing to add 400,000 barrels per day in November.

Natural gas prices jumped 2.6%. Energy companies rose along with energy prices. Devon Energy rose 5.3% for the biggest gain in the S&P 500. Marathon Oil climbed 4.1%.

The yield on the 10-year Treasury rose to 1.49% from 1.47% Friday. The yield was at 1.31% on Sept. 20. The swift rise in interest rates has forced a reassessment of whether stocks have grown too expensive, particularly already high-priced technology companies.

Investors are increasingly worried about inflation as oil prices rise and companies continue facing supply problems that increase their costs and force them to raise prices. Wall Street is also worried about the Federal Reserve’s timing on trimming back bond purchases and its eventual move to raise its benchmark interest rate.

“You really have a lot of reasons for the tape to trade defensively right now,” said Julian Emanuel, chief equity and derivatives strategist at BTIG. “If you’re not going to get the bond market rallying and yields declining, then the likelihood is you see more volatility in stocks,” he said.

Investors are also preparing for the latest round of corporate earnings, which will ramp up in the next several weeks. They are also still closely monitoring economic data for more signals about the pace of the recovery as businesses and consumers deal with the impact of COVID-19 and the highly contagious delta variant.

Wall Street will get more information on the economy’s health this week. On Tuesday, the Institute for Supply Management will release its service sector index for September. The services sector is the largest part of the economy and its health is a key factor for growth.

On Friday, the Labor Department will release its employment report for September. The employment market has been struggling to fully recover from the damage done by COVID-19 more than a year ago.

Tesla held on to a slight gain after the electric vehicle maker reported surprisingly good third-quarter deliveries. The stock rose 0.8% after having been up 4% in the early going.

In Asia, Hong Kong’s benchmark fell more than 2% after troubled property developer China Evergrande’s shares were suspended from trading. Shares in most European markets edged higher.

ASX 200 expected to fall

The Australian share market looks set to give back the majority of yesterday’s gains on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 75 points or 1.05% lower this morning.

This follows a bad start to the week on Wall Street. In late trade, the Dow Jones has dropped 0.94%, the S&P 500 has fallen 1.3%, and the Nasdaq is tumbling 2.14%.


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Stocks rise on Wall Street, led by tech, banks; oil near $79

By DAMIAN J. TROISE and ALEX VEIGA

Technology companies and banks led stocks higher on Wall Street Tuesday, erasing most of the market’s losses from a broad sell-off a day earlier.

The rally, which lost some momentum in the final hour of trading, left the S&P 500 1.1% higher. About 73% of the companies in the benchmark index rose.

Technology stocks did much of the heavy lifting for the broader market, which helped drive the Nasdaq 1.3% higher, its biggest gain since Aug. 23. Chipmaker Nvidia rose 3.6% and Microsoft gained 2%.

Communications stocks also made solid gains after losing ground the day before. Netflix rose 5.2%. Utilities and real estate stocks were the only laggards in the S&P 500.

The gains mark a reversal in the market’s overall trajectory in recent weeks. The S&P 500 fell 4.8% in September, its first monthly drop since January. After steadily losing ground since it set an all-time high Sept. 2, the index slipped Tuesday below its 100-day moving average of 4,354. That sends a signal to traders that the index has reached “a good level of support for stocks to trade higher,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

“Today’s activity is primarily in response to the weakness we’ve experienced over the last 10 days or so,” he said.

The S&P 500 rose 45.26 points to 4,345.72. The Dow Jones Industrial Average added 311.75 points, or 0.9%, to 34,314.67, and the Nasdaq gained 178.35 points to 14,433.83.

Small company stocks also notched gains. The Russell 2000 index picked up 10.89 points, or 0.5%, to 2,228.36.

Bond yields gained ground. The 10-year Treasury rose to 1.53% from 1.49% late Monday. Rising bond yields helped lift banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America rose 2% and Citigroup added 1.7%.

Energy prices continued rising. U.S. oil rose 1.7% to $78.93 per barrel. Natural gas futures jumped 9.5%. Rising energy prices have been steadily pushing gasoline prices higher. The average price for a gallon of gas in the U.S. is $3.20, up more than $1 from a year ago, according to AAA.

The rise in energy prices helped lift oil company shares. Chevron rose 1.1% and Hess rose 1.6%.

A wide range of companies that focus on consumer services gained ground following an encouraging update on the services sector, which is the largest part of the U.S. economy. The Institute for Supply Management reported that the sector continued growing in September and at a faster pace than economists expected. Chipotle rose 1.4% and Carmax gained 3%.

The market has been choppy for weeks as investors try to gauge how the economy will continue its recovery with COVID-19 and the highly contagious delta variant crimping consumer spending and job growth. Inflation concerns have been driving much of the up-and-down shifts for technology companies and the broader market.

Rising inflation has been prompting businesses from Nike to Sherwin-Williams to temper sales forecasts and warn investors that higher costs will hurt financial results. Supply chain disruptions and delays, along with rising raw materials costs, are among some of the key problems facing companies as they try to continue recovering from the pandemic’s impact.

The lingering pandemic and global supply chain problems prompted the International Monetary Fund to trim its forecast for global growth this year.

Still, Wall Street is still expecting solid corporate profit growth when the third-quarter earnings season kicks off later this month. S&P 500 companies are projected to post a 27.7% increase in earnings for the July-September quarter versus a year earlier, according to FactSet.

“We’re now on the doorstep of third-quarter releases, which in our view will show earnings are growing, and that’s a basis for stocks to trend higher,” Sandven said.

Facebook rose 2.1%. The stock fell nearly 5% on Monday as the company suffered a worldwide outage and faced political fallout after a former employee told “60 Minutes” that the company has consistently chosen its own interests over the public good. The former employee, Frances Haugen, testified in front of Congress on Tuesday.

Stock markets in Europe rose, while markets in Asia were mostly lower.

ASX 200 expected to rebound

The Australian share market is expected to rebound on Wednesday. According to the latest SPI futures, the ASX 200 is poised to open the day 49 points or 0.7% higher.

This follows a very strong night of trade on Wall Street. On closing, the Dow Jones was up 0.92%, the S&P 500 up 1.05%, and the Nasdaq up 1.25%

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Stocks edge higher as Wall Street shakes off volatility

By DAMIAN J. TROISE and ALEX VEIGA

Stocks recovered from an early slide on Wall Street to close with modest gains Wednesday as investors held out hope that Congress may yet be able to temporarily extend the federal government’s debt ceiling and buy lawmakers time to reach a more permanent resolution.

The market rallied back from a morning loss shortly after Senate Republican leader Mitch McConnell offered Democrats an emergency short-term extension to the federal debt ceiling into December.

Financial markets have mostly taken the debt-ceiling drama in stride, expecting yet another 11th hour solution, but some voices on Wall Street have warned investors recently to make preparations for a default, even if it is unlikely, given how extremely damaging it would be to the economy and markets.

“People were nervous about the debt ceiling,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.

The S&P 500 rose 17.83 points, or 0.4%, to 4,363.55. The benchmark index had been down 1.3% earlier. Gains in technology stocks, makers of household goods and communication companies helped offset losses in energy and other sectors. About 57% of stocks in the index rose. The S&P 500 had risen or fallen more than 1% on each of the past four days.

The Dow Jones Industrial Average rose 102.32 points, or 0.3%, to 34,416.99. The blue-chip index had been down more than 450 points in the early going. The Nasdaq gained 68.08, or 0.5%, to 14,501.91. The tech-heavy index had been down 1.2% before the afternoon rally.

Small-company stocks, a gauge of confidence in economic growth, fell: The Russell 2000 index gave up 13.36 points, or 0.6%, to 2,215.

If the nation’s debt ceiling, which caps the amount of money the federal government can borrow, isn’t raised by Oct. 18, the country “would likely face a financial crisis and economic recession,” Treasury Secretary Janet Yellen told Congress last week.

During a meeting Wednesday with bank executives, President Biden stressed the importance of Congress raising the debt limit.

“We haven’t failed to do that since our inception as a country. We need to act. These leaders know the need to act.”

The Senate went into recess late Wednesday so lawmakers could discuss McConnell’s proposal, delaying a procedural vote on a House-passed bill to suspend the debt cap.

The latest bout of market volatility comes as investors question the economy’s path forward, amid rising inflation and the ongoing impact from the virus pandemic. Bond yields have remained relatively stable since a sharp jump late last month that signaled concern that high inflation could linger longer than economists and investors had initially anticipated.

Bond yields rose broadly. The yield on the 10-year Treasury held steady at 1.53%. It was as low as 1.32% a little more than two weeks ago.

Energy prices retreated from a recent rally that contributed to inflation fears. U.S. crude oil fell 1.9% and natural gas plunged 10.1%. The drop weighed on energy companies. Exxon Mobil fell 1.8%.

International markets also sold off, with exchanges in Japan, South Korea, Germany and France all dropping more than 1%.

Investors are grappling with a long list of uncertainties, and that could mean a more durable pullback in stocks than Wall Street has experienced so far this year, said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. Inflation and the debt ceiling timeline in Washington are both key concerns, he said.

Wall Street is also still closely watching the Federal Reserve for any shift in timing for raising interest rates. Analysts have said that the central bank could act sooner than expected if high inflation persists.

“The investment case for those looking for further gains, at least this year, was the expectation that rates would stay at fairly low levels,” Samana said.

Investors will get a closer look at how companies fared in the third quarter when companies release their quarterly financial results over the coming weeks. Wall Street is expecting solid profit growth of 27% for S&P 500 companies, but will also be listening for commentary on how supply chain problems and higher costs are crimping operations.

Companies from a wide range of industries have issued warnings about supply chain problems, shipping delays and higher materials costs. Some companies are growing more concerned that the problem could stretch into the holiday shopping season that typically starts in late November. Toy companies are racing to get their products to retailers as they grapple with a severe supply chain crunch that could mean sparse shelves for the crucial holidays.

Homebuilder Hovnanian slumped 13.6% after warning investors that supply shortages will hurt its finances. Lighting maker Acuity Brands jumped 10.9% after handily beating analysts’ fiscal fourth-quarter profit forecasts.

On Friday, the Labor Department will release its anticipated employment report for September. The labor market has been slow to fully recover from the pandemic and the summer surge in COVID-19 cases further impeded its progress.

ASX 200 expected to rise

The Australian share market looks set to rise on Thursday. According to the latest SPI futures, the ASX 200 is expected to open the day 10 points or 0.15% higher this morning.

This follows a mildly positive night of trade on Wall Street, which on closing sees the Dow Jones up 0.26%, the S&P 500 up 0.15%, and the Nasdaq trading 0.47% higher.


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Stocks close higher as receding debt fears spur rally

By DAMIAN J. TROISE and ALEX VEIGA

Technology companies helped lift stocks on Wall Street broadly higher Thursday as investors welcomed the end of a standoff in Congress over extending the federal debt ceiling.

An agreement to temporarily extend the government’s borrowing authority into December gives lawmakers more time to reach a permanent solution, averting for now an unprecedented federal default that experts say would have devastated the economy.

The S&P 500 rose 0.8%, its third-straight gain. Nearly 80% of stocks within the benchmark index gained ground. The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq closed 1.1% higher.

The debt ceiling debate and the potential for an unprecedented federal default are among many concerns that have been weighing on the market. Those worries sent the benchmark S&P 500 swinging between daily gains and losses of more than 1% for four days.

Senate leaders announced an agreement Thursday to extend the government’s borrowing authority into December. The move came a day after Senate GOP leader Mitch McConnell made an offer that paved the way for the emergency extension of the debt ceiling.

The temporary compromise between Republicans and Democrats may have also helped give investors optimism that Congress can work out compromises in other areas, said Greg Bassuk, CEO at Axs Investments.

“The fact that it actually got done, we think, frankly, that we are seeing an outsized reaction in the markets today because of the sentiment that, ‘hey, maybe some more can get done as well,’” he said.

The S&P 500 rose 36.21 points to 4,399.76. The Dow gained 337.95 points to 34,754.94, and the Nasdaq added 152.10 points to 14,654.02.

Small company stocks, a gauge of confidence in economic growth, also notched gains. The Russell 2000 index picked up 35.14 points, or 1.6%, to 2,250.09. Markets in Europe and Asia also closed broadly higher.

Technology stocks powered a big share of the S&P 500′s gains. Apple rose 0.9% and chipmaker Nvidia added 1.8%.

Automakers were big winners among consumer discretionary sector stocks. Ford Motor rose 5.5% and General Motors gained 4.7%.

Health insurers helped lift health sector companies. Humana rose 2.9%, while UnitedHealth Group added 2.7%.

Technology companies helped lift stocks on Wall Street broadly higher Thursday as investors welcomed the end of a standoff in Congress over extending the federal debt ceiling.

An agreement to temporarily extend the government’s borrowing authority into December gives lawmakers more time to reach a permanent solution, averting for now an unprecedented federal default that experts say would have devastated the economy.

The S&P 500 rose 0.8%, its third-straight gain. Nearly 80% of stocks within the benchmark index gained ground. The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq closed 1.1% higher.

The debt ceiling debate and the potential for an unprecedented federal default are among many concerns that have been weighing on the market. Those worries sent the benchmark S&P 500 swinging between daily gains and losses of more than 1% for four days.

Senate leaders announced an agreement Thursday to extend the government’s borrowing authority into December. The move came a day after Senate GOP leader Mitch McConnell made an offer that paved the way for the emergency extension of the debt ceiling.

The temporary compromise between Republicans and Democrats may have also helped give investors optimism that Congress can work out compromises in other areas, said Greg Bassuk, CEO at Axs Investments.

“The fact that it actually got done, we think, frankly, that we are seeing an outsized reaction in the markets today because of the sentiment that, ‘hey, maybe some more can get done as well,’” he said.

The S&P 500 rose 36.21 points to 4,399.76. The Dow gained 337.95 points to 34,754.94, and the Nasdaq added 152.10 points to 14,654.02.

Small company stocks, a gauge of confidence in economic growth, also notched gains. The Russell 2000 index picked up 35.14 points, or 1.6%, to 2,250.09. Markets in Europe and Asia also closed broadly higher.

Technology stocks powered a big share of the S&P 500′s gains. Apple rose 0.9% and chipmaker Nvidia added 1.8%.

Automakers were big winners among consumer discretionary sector stocks. Ford Motor rose 5.5% and General Motors gained 4.7%.

Health insurers helped lift health sector companies. Humana rose 2.9%, while UnitedHealth Group added 2.7%.

Cruise lines were among the market’s decliners. Norwegian Cruise Line fell 2.2% and Carnival slid 1.7%. Royal Caribbean dropped 1.4%.

Energy futures prices bounced back after the U.S. Energy Department said it is not planning on tapping oil reserves. The price of U.S. crude oil rose 1.1%.

Bond yields rose. The yield on the 10-year Treasury rose to 1.57% from 1.52% late Wednesday.

COVID-19 continues to hamper the economic recovery following a surge of cases over the summer. Consumer spending and job growth was stunted and supply chain problems crimped operations in a wide range of industries.

More positive news on fighting off future spikes of the virus came from Pfizer on Thursday. It asked U.S. regulators to allow use of its COVID-19 vaccine in children ages 5 to 11. The drug developer’s stock rose 1.7%.

Investors received another encouraging piece of news on Thursday after the Labor Department reported that the number of Americans applying for unemployment benefits fell last week for the first time in four weeks. The labor market has been struggling to recover from the pandemic’s initial impact 18 months ago when lockdowns from COVID-19 gutted jobs.

Wall Street will get another snapshot of the job market and its recovery Friday when the Labor Department releases its employment report for September. The employment market’s recovery has been closely watched for any clues on how soon the Federal Reserve will ease its unprecedented support for the markets and economy. Inflation also remains a key concern because persistently high inflation could prompt the central bank to start raising interest rates sooner than expected.

Friday’s jobs report will likely have little impact on the Fed’s plan to start trimming its bond buying and on its timeline to start raising interest rates, said Jason Pride, chief investment officer of private wealth at Glenmede. He said that a lot of the mismatch between a slowdown in employment growth and a rise in job openings is circumstantial, such as people holding off on a return to the workforce to take care of family or learning new skills to find different jobs.

“I don’t think there’s anything that the Fed does with movement in interest rates or bond buying that will change people’s decision as to when they get back to the workforce,” he said. “It’s time to start taking the foot off of the pedal.”

Wall Street could see less volatility once the Fed actually starts trimming its bond purchases, he said, because “people will get comfortable with the pace and they’ll see the markets and economy can handle it.”

ASX 200 expected to rise again

The Australian share market looks set to end the week on a positive note. According to the latest SPI futures, the ASX 200 is expected to open the day 44 points or 0.6% higher.

This follows a strong night of trade on Wall Street, which on closing sees the Dow Jones up 0.
98%, the S&P 500 0.83% higher, and the Nasdaq up 1.05%.


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Stock indexes closing lower as jobs data sparks uncertainty

By STAN CHOE, DAMIAN J. TROISE and ALEX VEIGA

Wall Street capped a wobbly day of trading with a broad slide for stocks Friday, after a weak jobs report raised questions about the Federal Reserve’s timeline to pare back its immense support for markets.

The S&P 500 fell 0.2% after wavering between small gains and losses for much of the day. The modest drop snapped a three-day winning streak for the benchmark index. Even so, it managed a 0.8% gain for the week, less than half of the index’s loss last week.

The Dow Jones Industrial Average fell 8.69 points, or less than 0.1%, to 34,746.25, while the Nasdaq composite slid 74.48 points, or 0.5%, to 14,579.54.

Wall Street reacted with uncertainty and disappointment to the highly anticipated September jobs report. U.S. stocks moved up and down throughout the day, as did Treasury yields.

The yield on the 10-year Treasury climbed to 1.60% from 1.57% late Thursday after initially dropping to 1.56% immediately following the jobs report’s release.

Small company stocks fell more than the broader market. The Russell 2000 index dropped 17 points, or 0.8%, to 2,233.09.

Much of Wall Street assumed the job market had improved enough for the Fed to soon begin paring back its monthly purchases of bonds meant to hold down longer-term interest rates. Investors had also pegged the central bank to begin lifting short-term interest rates late next year. Current super-low interest rates have been one of the main forces driving stocks to record heights.

But Friday’s jobs report showed that employers added just 194,000 jobs last month, well short of the 479,000 that economists expected. Many investors still expect the Fed to stick to its timetable, but the numbers were weak enough to at least raise questions about whether it may wait longer to taper its bond purchases or to eventually raise short-term rates.

“The miss on jobs isn’t pretty — there’s no way around it,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial, in a statement. “And many may believe it will cause the Fed pause in terms of their tapering strategy. But the jury is out on how the market will interpret the data.”

Underneath the surface, the numbers don’t offer much more clarity. The unemployment rate ticked down to 4.8% from 5.1%, and the government revised past months’ hiring numbers higher. But last month’s hiring was still the weakest since December 2020. Average wages also rose a bit faster from August than expected, which helps workers but adds to worries about inflation.

“It gives the Fed a little bit more wiggle room on tapering and tightening in general,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.

Inflation remains a big concern for investors after climbing to its highest level in at least a decade, in part because of snarled supply chains as the global economy reboots from its pandemic-caused shutdown. Those supply chain issues will be a key point for investors as they review companies’ next round of quarterly financial reports.

“Earnings season is really going to be the next catalyst for the market to understand where to go through the end of the year,” Hodge said.

Rising energy prices have also contributed to inflation, and benchmark U.S. crude for delivery in November briefly topped $80 a barrel early Friday. That’s the highest the front-month contract for U.S. oil has been since 2014.

That helped drive energy stocks in the S&P 500 up 3.1%, by far the biggest gain among the 11 sectors that make up the index. Exxon Mobil rose 2.8%, and Pioneer Natural Resources climbed 4.6%.

Roughly three in five companies in the S&P 500 closed lower, with losses in technology and health care companies accounting for a big share of the slide. Citrix Systems fell 5.7%, while Bristol-Myers Squibb closed 3% lower. Only energy stocks and banks notched gains.

Friday’s choppy trading extends an already volatile run since the S&P 500 set its record high on Sept. 2. A swift rise in interest rates and the prospect of less support from the Fed have forced investors to reassess whether stock prices have grown too expensive. The worries about higher interest rates have also combined with political turmoil in Washington, D.C.

The S&P 500 had four straight days through Tuesday where it alternated between a gain of 1% and a loss of 1%. In recent days, the market has been more stable amid relief that Congress looks like it will at least delay a disastrous default on the U.S. federal debt.

Stock markets overseas closed unevenly Friday. In Europe, Germany’s DAX lost 0.3%, and France’s CAC 40 fell 0.6%. London’s FTSE 100 rose 0.2%.

Asian markets were stronger. Japan’s Nikkei 225 rose 1.3%, South Korea’s Kospi added 0.6% and stocks in Shanghai gained 0.7%.


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ASX 200 expected to edge lower

The Australian share market looks set to start the week on a subdued note. According to the latest SPI futures, the ASX 200 is expected to open the day 4 points or 0.05% lower this morning.

This follows a soft end to the week on Wall Street, which saw the Dow Jones edge slightly lower, the S&P 500 fall 0.2%, and the Nasdaq drop 0.5%.
 

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Stocks give up an early gain and end lower on Wall Street

By DAMIAN J. TROISE

Stocks closed broadly lower after a day of choppy trading on Wall Street Monday as investors prepare for a busy week of corporate earnings and inflation updates.

The major indexes made early gains, but slowly fizzled as the day progressed. The S&P 500 fell 30.15 points, or 0.7%, to 4,361.19. The benchmark index gained as much as 0.6% in the early going.

The Dow Jones Industrial Average fell 250.19 points, or 0.7%, to 34,496.06 and the Nasdaq shed 93.34 points, or 0.6%, to 14,486.20.

Technology and communications stocks had some of the biggest losses. Facebook fell 1.4% and Intuit fell 1.1%.

Most sectors ended in the red. Real estate stocks, which are seen as relatively less risky, were among the few bright spots within the S&P 500.

Bond trading was closed for the Columbus Day holiday. The price of U.S. crude oil rose 1.5% to over $80 a barrel.

Investors are looking ahead to the beginning of company earnings this week. Analysts have said that the latest round of corporate results could help give the market more direction after several choppy weeks. Stocks have been swaying between between gains and losses as investors try to better gauge the direction of the economic recovery through the rest of the year.

Banks will be among the first big companies to report their latest financial results and give investors more insight into how companies are faring amid concerns over the lingering virus pandemic and rising inflation.

JPMorgan Chase delivers its results on Wednesday. Bank of America, Wells Fargo and Citigroup will report results on Thursday.

Delta Air Lines will report its latest results on Wednesday. The airline industry is still struggling to recover from the pandemic shutdowns that began 18 months ago. Investors will be closely monitoring the industry’s results to see how much of an impact the summer surge of COVID-19 cases had on the industry.

Wall Street faced a quiet day of corporate news ahead of earnings. Southwest Airlines fell 4.2% after dealing with hundreds of flight cancellations over the weekend. Toymaker Hasbro fell 1.6% after announcing that CEO Brian D. Goldner is taking a medical leave of absence.

Investors are also looking ahead to economic data this week that could shed more light on what’s going on with inflation. The Labor Department will release its Consumer Price Index on Wednesday and its Producer Price Index on Thursday. The reports detail pressure from inflation on consumers and businesses.

Companies from a wide range of industries have warned investors that supply chain problems and higher raw materials costs could crimp their financial results for the rest of the year. Wall Street is closely monitoring whether those higher costs and resulting higher prices for goods will hurt consumer spending, which is a key driver of economic growth.

Inflation will likely remain the dominant theme swirling over markets through 2021 and into 2022, said Jay Hatfield, CEO of Infrastructure Capital Advisors. The upcoming Consumer Price Index data on Wednesday is likely going to be hotter than Wall Street expects, he added.

“Right when you’re going into earnings you have this CPI bomb that could go off,” he said. “We have a demand problem and a supply problem; there are too many dollars chasing too few goods.”

ASX 200 expected to fall

The Australian share market looks set to drop on Tuesday. According to the latest SPI futures, the ASX 200 is poised to open the day 9 points or 0.1% lower this morning.

This follows a mixed start to the week on Wall Street. On closing, the Dow Jones has dropped 0.72%, the S&P 500 has fallen 0.69%, and the Nasdaq fell 0.64%.


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