Stock market today: Wall Street drops as its September slump gets even worse

Wall Street is back to falling on Tuesday as its September swoon worsens.

The S and P 500 was 1.2 per cent lower in morning trading, coming off a rare gain and on track for its fifth drop in six days. The Dow Jones Industrial Average was down 294 points, or 0.9 per cent, at 33,712, as of 10:20 am Eastern time, and the Nasdaq composite was 1.3 per cent lower.

Stocks have tumbled this month, which is on track to be Wall Street's worst of the year, as the realisation sets in that the Federal Reserve will indeed keep interest rates high for a long time.

The growing understanding has sent yields in the bond market to their highest levels in more than a decade, which in turn has undercut prices for stocks and other investments.

Treasury yields were holding relatively steady Tuesday following a mixed batch of reports on the economy. The yield on the 10-year Treasury slipped to 4.51 per cent from 4.54 per cent late Monday, though it's still near its highest level since 2007.

One report showed confidence among consumers was weaker than economists expected. That's concerning because strong spending by US households has been a bulwark keeping the economy out of a long-predicted recession.

A separate report said sales of new homes across the country slowed by more last month than economists expected, while a third report suggested manufacturing in Maryland, the Virginias and the Carolinas may be steadying itself following a more than yearlong slump.

While housing and manufacturing have felt the sting of high interest rates, the economy overall has held up well enough to raise worries that upward pressure still exists on inflation. That pushed the Fed last week to say it will likely cut interest rates by less next year than earlier expected. The Fed's main interest rate is already at its highest level since 2001 in its drive to get inflation back down to its target.

Besides high interest rates, a long list of other worries is also tugging at Wall Street. The most immediate is the threat of another US government shutdown as Capitol Hill threatens a stalemate that could shut off federal services across the country.

Wall Street has dealt with such shutdowns in the past, and stocks have historically been turbulent in the runup to them, according to Lori Calvasina, strategist at RBC Capital Markets.

After looking at the seven shutdowns that lasted 10 days or more since the 1970s, she found the S and P 500 dropped an average of roughly 10 per cent in the three months heading into them.

Stocks managed to hold up rather well during the shutdowns, falling an average of just 0.2 per cent, before rebounding meaningfully afterward.

Besides the threats of higher interest rates for longer and a possible federal shutdown, Wall Street is also contending with higher oil prices, shaky economies around the world, a strike by US auto workers that could put more upward pressure on inflation and a resumption of US student-loan repayments that could dent spending by households.

On Wall Street, the vast majority of stocks were falling, including 90 per cent of those within the S and P 500.

Big Tech stocks tend to be among the hardest hit by high rates, and they were the heaviest weights on the index. Apple fell 2 per cent, Microsoft lost 1.8 per cent and Amazon tumbled 3.3 per cent.

Cintas dropped 3.7 per cent for one of the larger losses in the S and P 500. The provider of employee uniforms, mops, fire extinguishers and other services reported stronger profit for its latest quarter than analysts expected. It also raised its forecasts for revenue and profit for the full fiscal year, but still within a range that many analysts earlier expected.

Stocks were also falling in markets abroad, with indexes lower across Asia and much of Europe.

Japan's Nikkei 225 fell 1.1 per cent, South Korea's Kospi dropped 1.3 per cent and Hong Kong's Hang Seng lost 1.5 per cent.

In China, concerns continued over heavily indebted real estate developer Evergrande. The property market crisis there is dragging on China's economic growth and raising worries about financial instability.

France's CAC 40 fell 0.7 per cent, Germany's DAX lost 0.8 per cent and the FTSE 100 in London was an outlier with a 0.2 per cent gain.

Crude oil prices were slipping after charging higher through the summer and adding to worries about inflation. A barrel of benchmark US crude dipped 0.2 per cent, to USD 89.50. Brent crude, the international standard, was down 0.3 per cent, to USD 91.59 per barrel.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)