Stock market today: Wall Street joins worldwide slump

By Joe Mcdonald And Matt Ott, The Associated Press on May 31, 2023.

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NEW YORK (AP) – Stocks are slipping on Wall Street as a frenzy around artificial intelligence runs out of steam and worries rise about the strength of the global economy. The S&P 500 was 0.3% lower in early trading Wednesday. The Dow and the Nasdaq composite had similar declines. Markets in Asia fell even more following discouraging data on manufacturing from China. The world’s second-largest economy has not been rebounding as strongly as many investors had hoped. Wall Street has been able to weather such concerns recently, largely because of big gains for big tech companies and others getting swept up in the buzz around AI.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

Wall Street dipped early Wednesday along with global stock markets ahead of a vote by the U.S. Congress to avert a government debt default, while a downturn in Chinese factory activity deepened, another indication that the global economy is slowing.

Futures for the benchmark S&P 500 fell 0.4% and the Dow Jones industrials lost 0.3% ahead of a vote by the full 435-member House on raising the government debt limit. Some legislators object to spending cuts in the plan while others want bigger reductions.

President Joe Biden and Speaker Kevin McCarthy of the House of Representatives tried to line up votes to raise the amount the government is allowed to borrow. Officials warn the Treasury will run out of money as soon as next week, which would roil the economy and financial markets.

“Any upcoming obstacle to a smooth pass-through of the deal could still trigger some de-risking,” Yeap Jun Rong of IG said in a report.

Uncertainty about U.S. government debt is contributing to unease over interest rate hikes by central banks that are trying to cool inflation.

Even without a default, all the partisan brinkmanship in Washington could erode faith in the U.S. government. That could trigger another downgrade to its credit rating, following the shocking Standard & Poor’s rating cut in 2011.

Traders are bracing for another possible increase in the Federal Reserve’s key lending rate at its next meeting in two weeks but hope that will be the last in this cycle.

An official Chinese survey of manufacturers released Wednesday found activity contracted in May on weak global and domestic consumer demand.

Recovery for the world’s No. 2 economy has been weaker than economists and investors hoped, likely contributing to steadily declining oil prices.

A monthly purchasing managers’ index issued by the national statistics agency and an industry group declined to 48.4 from April’s 49.2 on a 100-point scale in which numbers below 50 show activity declining. Manufacturers have been hurt by weak global demand and a slower-than-expected recovery in Chinese consumer spending.

In Asia, the Shanghai Composite Index lost 0.6% to 3,204.56 and the Nikkei 225 in Tokyo fell 1.4% to 30,887.88. The Hang Seng in Hong Kong tumbled 1.9% to 18,234.27.

The Kospi in Seoul retreated 0.3% to 2,577.12 and the S&P-ASX 200 in Sydney fell 1.6% to 7,091.30.

India’s Sensex lost 0.7% to 62,514.88. New Zealand advanced while Southeast Asian markets declined.

Advance Auto Parts slid 26% in premarket after it badly missed Wall Street’s first-quarter earnings targets and cut full-year profit guidance by more than 40%.

At midday in Europe, the CAC 40 in Paris sank 0.7%, the DAX in Frankfurt retreated 0.4% and the FTSE 100 in London lost 0.2%.

In energy markets, benchmark U.S. crude lost another $1.87 to $67.59 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.21 on Tuesday to $69.46, falling below $70 this week for the first time in more than two months. Brent crude, the price basis for international oil trading, shed $1.72 to $71.99 per barrel in London. It sank $3.53 the previous session to $73.54.

The dollar declined to 139.77 yen from Tuesday’s 139.87 yen. The euro retreated to $1.0680 from $1.0719.

On Tuesday, the S&P 500 index edged up less than 0.1%, while the Dow slipped 0.2% and the Nasdaq composite rose 0.3%.