Stocks slide on Wall Street after another winding day

NEW YORK (AP) — U.S. stocks fell Tuesday after another day of twisty trading, as Wall Street ponders whether the market’s recent strong run is the start of a reversal or just a temporary hiccup.

The S&P 500 fell 27.44, or 0.7%, to 4,091.19 after drifting between a 0.9% loss and a 0.5% gain during the day. The Dow Jones Industrial Average fell even further, losing 402.23, or 1.2%, to 32,396.17, largely due to the fall of equipment maker Caterpillar. The Nasdaq composite held up better but still slipped 20.22, or 0.2%, to 12,348.76.

Treasury yields climbed throughout the day as concerns eased somewhat that the first visit by a US Speaker of the House to Taiwan in 25 years could spark a conflict between the world’s two largest economies. . Analysts also cited comments from Federal Reserve officials suggesting continued interest rate hikes are ahead in order to bring down inflation.

The S&P 500 is down almost 1% so far this week after hitting its best month since the end of 2020 in July. Federal Reserve interest rate to fight it.

Some recent weak data on the economy has bolstered speculation that the peak of inflation and aggressive rate hikes from the Federal Reserve may be approaching or may have already passed. The weak data, however, also shows the risk of a recession as the Fed puts the brakes on the economy.

A report on Tuesday showed US employers posted fewer job openings in June, and the number was lower than economists expected. Much depends on the ability of the labor market to remain resilient. This has helped support the economy as inflation tears through household finances across the country.

A report on Friday will show how many workers U.S. employers added last month, and economists expect it to show the jobless rate remains very low even as hiring has slowed.

More support on Wall Street recently came from stronger-than-expected spring corporate earnings. Ride-sharing company Uber jumped 18.9% on Tuesday after posting higher-than-expected revenue by analysts.

Other better-than-expected reports so far this earnings season have helped the S&P 500 climb 11.6% since hitting a low in mid-June. Such double-digit rallies have always been common in long-term bear markets, although larger declines can quickly follow them. Since 1929, “bear markets,” which are what Wall Street calls a long-term decline of 20% or more for stocks, have seen an average of 1.5 such “bear market rallies,” the strategists wrote. in a report by BofA Global Research. Savita Subramanian wrote in the report that she was sticking to her year-end target of 3,600 for the S&P 500, which would imply a further decline of 12%.

A discouraging signal for investors came Tuesday from a Caterpillar earnings report, seen by some on Wall Street as an economic indicator. Its stock fell 5.8% after the Illinois-based backhoe and bulldozer maker reported weaker revenue for the last quarter than analysts expected.

Much of Wall Street’s attention on Tuesday was also centered across the Pacific Ocean on US House Speaker Nancy Pelosi, whose plane landed in Taiwan shortly after the start exchanges in New York. His visit is raising tensions with China, which claims Taiwan as its own and quickly announced that it would carry out military maneuvers in retaliation for his presence.

Financial markets are concerned that tensions could boil over, causing international trade to stall. China and Taiwan together are the source of half of the world’s consumed semiconductor chips “and almost all of the latest high-tech chips,” Carl Weinberg, chief economist at High Frequency Economics, wrote in a report.

Treasury yields fell in the morning on concerns but rallied as the day progressed. The 10-year yield rose to 2.75% from 2.61% Monday night.

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AP Economics Writer Paul Wiseman contributed.

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Garland K. Long