US Stocks Fall in Late Sell-off 01/20 15:55
A late-afternoon sell-off wiped out gains for stocks on Wall Street Thursday
and sent major indexes deeper into losing territory for the year.
(AP) -- A late-afternoon sell-off wiped out gains for stocks on Wall Street
Thursday and sent major indexes deeper into losing territory for the year.
The sharp about-face for the broader market was once again directed by
technology stocks, which have been behind choppy trading throughout week. As
investors prepare for higher interest rates, shares in pricey tech companies
and other expensive growth stocks look relatively less attractive.
The S&P 500 fell 50.03 points, or 1.1%, to 4,482.73, with nearly 85% of
stocks in the index falling. The benchmark index closed at a three-month low
after having been up as much as 1.5% earlier in the day.
The Dow Jones Industrial Average fell 313.26 points, or 0.9% to 34,715.39.
The Nasdaq fell 186.23 points, or 1.3%, to 14,154.02. The index's losses in
recent months had by Wednesday left it in what Wall Street considers a market
correction, or 10% below its peak.
Apple fell 1% and chipmaker Nvidia shed 3.7%.
A mix of retailers and communications stocks also fell. Investors reversed
course from earlier in trading and shifted money back toward safe-play
investments. Utilities, which are considered less-risky, were the only sector
within the S&P 500 that eked out gains.
Bond yields fell. The yield on the 10-year Treasury fell to 1.81% from 1.82%.
Stocks are headed for weekly losses in what has so far been a losing month
for every major index. The downturn follows a strong 2021 where the S&P 500
gained 26.9%. Investors may be resetting their expectations moving ahead, said
Mark Hackett, chief of investment research at Nationwide.
"Investors are starting to get more realistic about the way the world is
going to look going forward," he said.
The Labor Department gave Wall Street a disappointing update on the labor
market with its weekly unemployment report. The number of Americans applying
for unemployment benefits rose to the highest level in three months as the
fast-spreading omicron variant continued to disrupt the job market.
The job market has had a rocky recovery from the virus pandemic. The
unemployment rate fell last month to a pandemic low 3.9%.
Employment data was also closely watched by investors trying to gauge how it
would effect the Federal Reserve's decision to ease up on support for the
markets and economy. The central bank made it clear early in the pandemic that
it was basing much of its support on how quickly employment recovers.
The Fed is now expected to raise interest rates earlier and more often in
order to fight rising inflation that threatens to derail a further economic
recovery. Supply chain problems and higher raw materials costs have prompted
businesses to raise prices on finished goods and economists are concerned that
consumers will eventually grow tired of paying higher prices and cut their
Companies are reminding investors that supply chain problems are still
weighing on operations. Recent inflation reports have been worrisome, while
economic data on retail sales has also disappointed.
"These are all the things that are justifying some of the sloppiness we're
starting the year with," Hackett said.
The latest round of corporate earnings is also giving investors a clearer
picture of where Americans are spending money and how inflation is impacting
American Airlines fell 3.2% and United Airlines slipped 3.4% after warning
investors that the latest surge in COVID-19 cases will hurt their finances
early in 2022. Both airlines reported losses for the fourth quarter, though
they were smaller than analysts' expected.
Aluminum products maker Alcoa jumped 2.7% after reporting strong
fourth-quarter financial results as prices for commodities rose. Insurer
Travelers rose 3.2% after handily beating analysts' financial forecasts.
Peloton shares lost about a quarter of their value after CNBC reported the
company is temporarily halting production of its treadmills and exercise bikes.
The business news network said it reviewed internal Peloton documents that
indicated demand for the company's connected fitness equipment had fallen
sharply because of pricing and competition. Peloton shares soared as people
exercised at home in the first year of the pandemic, but have fallen 85% since
closing at an all-time high of $167.42 on Jan. 13, 2021. On Thursday, its
shares lost 23.9% to $24.22.