People walk past the New York Stock Exchange on Wednesday, June 29, 2022 in New York. (AP Photo/Julia Nikhinson)
NEW YORK (AP) – Stocks closed lower as Wall Street waited for a highly anticipated report on inflation that’s arriving the following day. The S&P 500 lost 0.7% Wednesday, and has now dropped six of the last seven days. The Dow lost 191 points, or 0.5%, after flipping between gains and losses through the day. The Nasdaq composite fell 1.2%. Companies are continuing to report better-than-expected profits for the spring. Taser maker Axon Enterprise jumped following its report. But more attention is on Thursday’s inflation data, which investors hope will give the Federal Reserve reason to halt its hikes to interest rates.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) – Stocks are drifting Wednesday, as Wall Street waits for a highly anticipated report on inflation that’s arriving the next day.
The S&P 500 was edging down by 0.1% in late trading, coming off a tough run where it’s dropped in five of the last six days. The Dow Jones Industrial Average was down 5 points, or less than 0.1%, at 35,308 after flipping between gains and losses through the day. The Nasdaq composite was 0.6% lower with just under an hour remaining in trading.
Stocks have cooled in August since soaring 19.5% through the first seven months of the year. Several reasons are behind the mini-pullback, including criticism that Wall Street too quickly formed a consensus that inflation will keep cooling, the economy will keep growing and the Federal Reserve has already finished its hikes to interest rates.
A report on Thursday will offer a big clue on how warranted those hopes are. The U.S. government will give the latest monthly update on inflation that consumers are feeling across the country, and economists expect to see an acceleration to 3.3% in July from 3% in June.
Such a reading would be down sharply from its peak of more than 9% last summer, but economists say the last bit of improvement to get inflation down to the Fed’s 2% target may be the toughest part.
Fed officials have said repeatedly recently that their upcoming decisions on interest rates will depend on what the data tells them, and they’ve pointed to reports on inflation and the job market in particular.
“With risks turning increasingly two-sided, Fed officials are beginning to shift the focus toward how long to hold rates steady at sufficiently restrictive levels,” according to economists at Deutsche Bank.
A reading on Thursday that’s much worse than expected could raise fears that the Fed’s job in battling inflation is far from done and that it may have to keep hiking interest rates. At the least, it could push the Fed to keep rates high for longer than expected.
High rates slow inflation by grinding down the entire economy and hurting investment prices. The Fed has already pulled its federal funds rate to the highest level in more than two decades.
In the meantime, companies continue to offer profit reports for the spring that are mostly better than analysts expected.
Axon Enterprise, the company behind Tasers and Axon body cameras, jumped 14.9% for the biggest gain in the S&P 500. It reported much stronger profit for the spring than analysts expected.
Akamai Technologies also helped to lead the market after beating forecasts for both profit and revenue. Akamai’s stock rose 8.9%. A majority of stocks within the S&P 500 were rising.
Outside of earnings, Penn Entertainment jumped 9.8% after the gaming company announced Tuesday that it was paying $1.5 billion for the exclusive rights to re-brand its sports-betting app with the ESPN name.
On the losing end of Wall Street was Lyft, which fell 8.9%. The ride-share company reported better results for the latest quarter than expected, and its forecasts for the current quarter also topped forecasts. But analysts highlighted some cautious comments from the company for expectations for the end of the year.
WeWork plunged 39.7% to 13 cents after saying there’s substantial doubt about its ability to stay in business as it burns through cash. The workspace-sharing company has already had a couple spectacular rises and falls in its history, and it reported a larger loss than expected for the spring late Tuesday.
Nvidia was the heaviest weight on the S&P 500, falling 3.8%. The chipmaker is one of the stocks that have rocketed this year due to Wall Street’s frenzy around artificial-intelligence technology, raising fears that they went too far.
In the bond market, the yield on the 10-year Treasury slipped to 4.00% from 4.03% late Tuesday. That yield helps set rates for mortgages and other loans.
The two-year Treasury yield, which moves more on expectations for action by the Fed, rose to 4.80% from 4.76%.
In stock markets abroad, indexes were modestly higher in Europe and mixed in Asia. A report showed that prices at the consumer level in China are lower than a year earlier. It’s the latest evidence of sputters for the world’s second-largest economy.
China was supposed to help prop up the global economy after it removed anti-COVID restrictions, but it’s fallen short of expectations. The weakness, though, has also kept some pressure off inflation around the rest of the world.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
