Wall St extends losses as Fed worries remain; Bed Bath & Beyond shares sink

Wall Street’s main indexes slipped on Tuesday as a stronger-than-expected reading on the U.S. services sector fed into expectations that the Federal Reserve will keep raising interest rates to tame inflation.

The tech-heavy Nasdaq was set for its seventh consecutive day of losses in what could be its longest such losing streak since November 2016.

Rate-sensitive shares of Apple, Amazon.com Inc and Microsoft Corp fell about a percent each as benchmark U.S. Treasury yields rose to their highest levels since June.

“The primary concern by far, for almost everyone, is really just what’s going to happen with the Fed and interest rates,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

“While the Fed’s definitely going to keep hiking its interest rates, I think there’s zero question about that. The only question is how much and how fast.” A survey from the Institute for Supply Management (ISM) showed the U.S. services industry picked up in August for the second straight month amid stronger order growth and employment, while supply bottlenecks and price pressures eased.

However, numbers from S&P Global showed services sector PMI fell short of flash estimates for August.

Traders see about 75 per cent chance of a third 75-basis-point rate hike at the Fed’s policy meeting later this month.

Focus will be on Fed Chair Jerome Powell’s speech on Thursday as well the U.S. consumer prices data next week for clues on the path of monetary policy.

Markets started September on a weak note as hawkish comments from Fed policymakers and data signaling momentum in the U.S. economy raised fears of aggressive interest rate hikes.

The benchmark S&P 500 closed at a six-week low on Friday as worries about the European gas crisis overshadowed relief from the monthly jobs data, which pointed to a slight easing of wage pressures. The index is down nearly 18 per cent so far this year, while the Nasdaq has shed nearly 26 per cent as rising interest rates hurt megacap technology and growth stocks.

Among the major S&P sectors, consumer discretionary and communication services fell the most, while defensive utilities and real estate rose.

At 12:17 p.m. ET, the Dow Jones Industrial Average was down 104.63 points, or 0.33 per cent, at 31,213.81, the S&P 500 was down 9.49 points, or 0.24 per cent, at 3,914.77, and the Nasdaq Composite was down 49.39 points, or 0.42 per cent, at 11,581.47.

The CBOE Volatility index, also known as Wall Street’s fear gauge, rose to 26.5 points.

Bed Bath & Beyond Inc fell 16.6 per cent after Chief Financial Officer Gustavo Arnal fell to his death from New York’s Tribeca skyscraper.

Digital World Acquisition Corp tumbled 16.3 per cent after Reuters reported the blank-check acquisition firm that agreed to merge with Donald Trump’s social media company failed to secure enough shareholder support for an extension to complete the deal.

Declining issues outnumbered advancers for a 1.91-to-1 ratio on the NYSE and 1.72-to-1 ratio on the Nasdaq.

The S&P index recorded no new 52-week highs and 22 new lows, while the Nasdaq recorded 16 new highs and 253 new lows.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor