Stocks are off to a mixed start, remain lower for the week

By ALEX VEIGA
AP Business Writer

Stocks are modestly higher in early trading Wednesday as Wall Street prepares to close the books on a rocky August that started off strong, but left the market deeper in the red.

The S&P 500 is up 0.4% as of 10 a.m. Eastern. The benchmark index is coming off a three-day skid and is on pace to end the month with a 2.9% loss after surging 9.1% in July.

The Dow Jones Industrial Average rose 37 points, or 0.1%, to 31,823 and the Nasdaq rose 0.7%.

Communications, technology and health care companies helped lift the market. Meta Platforms rose 5.2%, PayPal gained 4.2% and Amgen added 1.2%.

Energy companies fell along with crude oil prices. Occidental Petroleum slid 2.1%.

Bed Bath & Beyond sank about 23% after announcing a major restructuring and a stock sale, while Snap, the operator of the Snapchat messaging app, jumped 10.3% after announcing it will lay off 20% of its work force.

Bond yields rose. The yield on the 10-year Treasury, which influences interest rates on mortgages and other consumer loans, rose to 3.13% from 3.11% late Tuesday.

European markets were lower and Asian markets closed mixed Wednesday.

Stocks got off to a solid start in early August, continuing a July rally. Investors were encouraged to see that signs that inflation, while still high, was leveling off. That fueled optimism on Wall Street that the Federal Reserve might be able to ease back on raising interest rates, its main weapon in its fight to bring inflation down. Those gains followed a weak first half of the year where the S&P 500 dropped 20% from its most recent high and entered a bear market.

That optimism faded by mid-August as the central bank signaled it would keep raising rates as long as necessary to tame the the hottest inflation in four decades. On Friday, Federal Reserve Chairman Jerome Powell underscored the Fed’s intention in a speech at the central bank’s annual symposium.

Wall Street is worried that the Fed could hit the brakes too hard on an already slowing economy and veer it into a recession. Higher interest rates also hurt investment prices, especially for pricier stocks like technology companies.

Traders are now trying to get a better sense of how far and how quickly the Fed’s rate hikes will go, beginning with the central bank’s upcoming interest rate policy meeting September 20-21. The Fed has already raised interest rates four times this year and is expected to raise short-term rates by another 0.75 percentage points at its September meeting, according to CME Group.

Investors have been closely watching economic data for any additional signs that the economy is slowing down or that inflation may be cooling or at least holding at its current level. Businesses and consumers have been hit hard by rising prices on everything from food to clothing, but recent declines in gasoline prices have provided some relief.

Strong U.S. employment data have helped fuel expectations of more interest rate hikes. The Labor Department reported Tuesday there were two jobs for every unemployed person in July, giving ammunition to Fed officials who argue the economy can tolerate more rate hikes to tame inflation that is at multi-decade highs.

More employment reports are on tap for later in the week, with jobless benefits data coming Thursday and the August jobs report scheduled for Friday. Analysts expect both to show a robust labor market.

In Europe, markets fell after a report showed inflation in countries using the euro hit another record in August as energy prices soared, largely because of Russia’s war in Ukraine. Annual inflation in the eurozone’s 19 countries rose to 9.1%, up from 8.9% in July, according to the European Union statistics agency Eurostat.

Inflation is at the highest levels since record-keeping for the euro began in 1997. The latest figures add pressure on European Central Bank officials to continue raising interest rates, which can tame inflation, but also stifle economic growth.