Stocks open lower on Wall Street, extending a weak streak
NEW YORK (AP) — Stocks are opening mostly lower on Wall Street Wednesday, extending a weak stretch for the market into a third straight day. The S&P 500 was down 0.5% in the early going. The benchmark index has fallen three out of the past four weeks. Nearly halfway through 2022, the index is down more than 20% for the year as investors worry about persistently high inflation as well as the possibility that the interest rate increases the Federal Reserve is making to combat it may cause a recession. The yield on the 10-year Treasury note fell to 3.17%.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — Wall Street bounced between gains and losses Wednesday morning after updated economic data showed the U.S. economy shrank slightly more than previously thought.
Futures for the Dow industrials rose 0.2% while futures for the S&P 500 were back to flat after recovering from negative territory earlier.
The Commerce Department released its third and final estimate on economic growth for the first three months of 2022 Wednesday, showing that U.S. economy shrank 1.6%. That figure was in line with previous estimates, though it probably doesn’t signal the start of a recession, and economists expect growth to resume later this year.
But the department said consumer spending — which accounts for about two-thirds of economic output — was substantially weaker than it had calculated earlier, growing at a 1.8% annual pace instead of the 3.1% it estimated in May.
Investors worried by uncertainty over inflation, rising interest rates and the potential for a recession also were awaiting remarks by central bank leaders including Fed Chair Jerome Powell.
In Europe at midday, Germany’s DAX lost 1.5%, the CAC 40 in Paris fell 1% and Britain’s FTSE 100 was essentially flat.
On Tuesday, the S&P 500 fell 2%, the Dow Jones Industrial Average fell 1.6%, and the Nasdaq fell 3% after a survey showed that U.S. consumer confidence was eroding. The weaker-than-expected consumer confidence reading revealed that persistently high inflation was making Americans more pessimistic about both the present and future.
“All regions, countries, industries, and stocks are getting printed red with broad strokes. It is not looking pretty, and trading the bad news is good news theory could end in tears,” Stephen Innes of SPI Asset Management said in a report.
Tokyo’s Nikkei 225 index lost 0.9% to 26,804.60 while the Kospi in Seoul fell 0.8% to 2,377.99. The Hang Seng in Hong Kong declined 1.9% to 21,996.89. The Shanghai Composite index sank 1.4% to 3,361.52.
Australia’s S&P/ASX 200 gave up 0.9% to 6,700.20. Bangkok’s SET lost 0.5%, while India’s Sensex was nearly unchanged.
Investors face a pervasive list of concerns centering around rising inflation squeezing businesses and consumers. Supply chain problems that have been at the root of rising inflation were made worse over the last several months by increased restrictions in China related to COVID-19.
Businesses have been raising prices on everything from food to clothing. Russia’s invasion of Ukraine in February put even more pressure on consumers by raising energy prices and pumping gasoline prices to record highs.
Consumers already were shifting spending from goods to services as the economy recovered from the pandemic’s impact, but the intensified pressure from inflation has prompted a sharper shift away from discretionary items like electronics to necessities.
Central banks are raising rates to try and temper inflation after years of holding rates down to help economic growth but investors fear they could go too far and actually push economies into a recession.
Wall Street is bracing for the next round of corporate earnings in the next few weeks. They will help paint a clearer picture of how companies are dealing with the squeeze from rising costs and consumers curtailing some spending.
Shares in Bed Bath & Beyond tumbled 15% in premarket after the struggling retailer announced CEO Mark Tritton was leaving the company and will be replaced by independent director Sue Grove. Also Wednesday, Bed Bath & Beyond reported a $2.83 per share loss in the first quarter, far worse than the $1.39 per share loss Wall Street was expecting.
In other trading Wednesday, the yield on the 10-year Treasury note, which helps set mortgage rates, slipped to 3.17% from 3.19%.
U.S. benchmark crude oil gained $1.53 to $113.29 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude, the basis for pricing in international trading, climbed $1.48 to 115.28 per barrel.
The dollar rose to 136.48 Japanese yen from 136.12 yen late Tuesday. The euro weakened to $1.0520 from $1.0522.
