FILE - A street sign is seen in front of the New York Stock Exchange in New York, Tuesday, June 14, 2022. Wall Street headed lower early Tuesday, Dec. 5, 2023, after Moody’s Investor Service downgraded China’s sovereign debt rating as the country’s real estate crisis seeps into its local government and private financing. (AP Photo/Seth Wenig, File)
NEW YORK (AP) – Stocks closed lower on Wall Street after another sharp slide for the price of crude dragged down big oil-and-gas stocks. The S&P 500 fell 0.4% Wednesday for its third straight loss, locking in its longest losing streak since October. Each of those drops was modest, though, and the index remains near its best level in 20 months. The Dow fell 0.2%, and the Nasdaq lost 0.6%. Energy stocks had the worst drops by far after the price of crude oil sank more than 4%, touching its lowest level since June. Marathon Petroleum fell 3.9%. Treasury yields fell.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) – Wall Street is hanging near its best level in 20 months Wednesday following the latest signals that pressure on inflation may be easing.
The S&P 500 was edging down by 0.1% in late trading. The Dow Jones Industrial Average was virtually unchanged, as of 3 p.m. Eastern time, and the Nasdaq composite was 0.2% lower.
Stocks of oil-and-gas companies weighed on the market after oil touched its lowest price since June. Helping to counter that was a gain of 3% for homebuilder Toll Brothers, which reported stronger profit for the latest quarter than analysts expected. It also said demand from buyers has remained solid so far in the current quarter, thanks in part to slightly easier rates available for mortgages.
Mortgage rates have regressed as Treasury yields have dropped on hopes that the Federal Reserve may finally be finished with its barrage of hikes to interest rates, meant to get high inflation under control. Wall Street is betting the Fed’s next move will be to cut rates, possibly as early as March, which would juice the economy and financial markets.
More reports came Wednesday to suggest the Federal Reserve could at least hold steady on rates for now. Its next meeting on interest rates is in a week, and the widespread expectation is for it to leave its main interest rate alone at its highest level in more than two decades.
One report said private employers added fewer jobs last month than economists expected. While no one on Wall Street wants to see massive layoffs, a cooldown in the job market could remove upward pressure on inflation.
A more comprehensive report on the jobs market from the U.S. government will arrive Friday, one that can cause big swings on Wall Street.
“What we don’t know is how much the markets have already priced in a slowing labor market, or how they will react if Friday’s data comes in stronger than anticipated,” said Chris Larkin, managing director, trading and investing at E-Trade from Morgan Stanley.
A separate report on Wednesday said U.S. businesses were able to increase the amount of stuff they produced in the summer by more than the total number of hours their employees worked. That stronger-than-expected gain in productivity more than offset increases to workers’ wages, and it could also keep a lid on inflationary pressures.
Treasury yields in the bond market were generally lower following the economic reports, and the 10-year yield fell to 4.12% from 4.17% late Tuesday. It was above 5% and at its highest level since 2007 in October.
Within the S&P 500, Campbell Soup was one of the biggest winners and rose 7% after reporting stronger profit for the latest quarter than expected.
Travel-related companies were also strong as crude oil prices fell sharply again to relieve some pressure on them. Carnival rose 5.9%, and Norwegian Cruise Line gained 3.2%.
Airlines were also flying high. Delta Air Lines climbed 4.7% after it told investors it’s sticking to its forecasts for revenue and profit for the end of 2023. United Airlines rose 4.3%, and Southwest Airlines gained 3.8%.
On the losing end of Wall Street was Brown-Forman, the company whose brands include Jack Daniel’s whiskey. It fell 10.3% after reporting weaker earnings than analysts had forecast. It also cut its forecast for a measure of sales growth for the full year.
The drop in crude prices also dragged down stocks of oil-and-gas companies. ConocoPhillips fell 2.2%, and Marathon Oil lost 2.8%.
Crude prices have been generally falling for the last two months on expectations that too much oil is available for the global economy’s demand. A barrel of benchmark U.S. crude slumped $2.94 to settle at $69.38. It was above $93 in September. Brent crude, the international standard, fell 3.8% to $74.30 per barrel.
Shares of British American Tobacco sank 8.4% in London after the company said it will take a non-cash hit worth roughly 25 billion British pounds ($31.39 billion) to account for a drop in the value of some of its “combustible” U.S. cigarette brands. It’s moving toward a “smokeless” world, such as e-cigarettes.
In the U.S., shares of Altria Group, the maker of Marlboro and other cigarettes, fell 2.5%.
Wall Street could be setting itself up for disappointment if cuts to rates do not come as quickly as hoped. While Federal Reserve officials have hinted that their main interest rate may indeed be at a peak, some have said it’s too early to begin considering when cuts could come.
Stock markets abroad were mostly higher. Japan’s Nikkei 225 jumped 2% after a top central bank official reiterated the Bank of Japan’s will keep its monetary policy easy until it achieves a stable level of inflation.
Gains were more modest across the rest of Asia and Europe.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
