S&P 500 ends at lowest since June 1 as data fuels rate worries
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[October 04, 2023] By
Caroline Valetkevitch
NEW YORK (Reuters) - The S&P 500 index closed at its lowest level since
June 1 on Tuesday as economic data underscored the view the Federal
Reserve may need to keep interest rates high.
The Dow turned negative for the year for the first time since June and
ended at its lowest level since May 31. The Nasdaq also closed at its
lowest since May 31.
Data showed U.S. job openings unexpectedly increased in August, fueling
worries about a tight labor market ahead of Friday's key U.S. monthly
jobs report.
Investors continue to closely watch benchmark Treasury yields, which hit
16-year highs on Tuesday.
"The scenario that most investors were assuming is the Fed would need to
ultimately cut short-term rates, and we would return to a favorable
interest rate environment," said Rick Meckler, partner at Cherry Lane
Investments, a family investment office in New Vernon, New Jersey.
"But investors are seeing a different scenario now - higher rates for
longer."
Higher borrowing costs are a negative for businesses and consumers.
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All but one S&P 500 sector - utilities - were lower on the day, led by
declines in consumer discretionary and technology. Growth companies tend
to be among the hardest hit by rising yields.
The Dow Jones Industrial Average fell 430.97 points, or 1.29%, to
33,002.38, the S&P 500 lost 58.94 points, or 1.37%, at 4,229.45 and the
Nasdaq Composite dropped 248.31 points, or 1.87%, to 13,059.47.
The CBOE volatility index, Wall Street's "fear gauge," hit its highest
close since May 24.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., September 28, 2023. REUTERS/Brendan McDermid/File
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Atlanta Fed President Raphael Bostic said there is no urgency for
the central bank to raise its policy rate again, but it will likely
be "a long time" before rate cuts are appropriate. Cleveland Fed
President Loretta Mester said she is open to raising rates again,
potentially at the bank's next meeting.
Shares of Amazon.com and Microsoft dropped after Reuters reported
British media regulator Ofcom will push for an antitrust
investigation into the companies' dominance of the UK cloud
computing market.
Investors are getting ready for U.S. companies in the coming weeks
to begin reporting on the last quarter, with some hoping the results
could provide some positive news again for the market.
While the Dow is down 0.4% for the year, the Nasdaq remains up about
25% since Dec. 31 after a rally driven by enthusiasm over artificial
intelligence.
Volume on U.S. exchanges was 11.16 billion shares, compared with the
10.57 billion average for the full session over the last 20 trading
days.
Declining issues outnumbered advancers on the NYSE by a 5.61-to-1
ratio; on Nasdaq, a 3.52-to-1 ratio favored decliners.
The S&P 500 posted one new 52-week high and 63 new lows; the Nasdaq
Composite recorded 15 new highs and 439 new lows.
(Reporting by Caroline Valetkevitch; additional reporting by Ankika
Biswas and Shashwat Chauhan in Bengaluru; Editing by Vinay Dwivedi,
Maju Samuel and Richard Chang)
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