US STOCKS-Wall Street slide deepens as elevated yields keep market on edge

A possible shutdown was adding to worries for stock investors as they grapple with benchmark Treasury yields that have climbed to 16-year highs after the Federal Reserve last week signaled a hawkish long-term path for interest rates. "The market is really trying to find some positive news bits to focus on but it's really tough," said Carol Schleif, chief investment officer with the BMO Family Office.

Wall Street's main indexes fell on Wednesday, deepening a pullback in equities, as rising Treasury yields kept investors on edge about the path ahead for interest rates.

Investors were also watching developments in Washington as divisions among U.S. lawmakers put the federal government at risk of a partial shutdown by the weekend. A possible shutdown was adding to worries for stock investors as they grapple with benchmark Treasury yields that have climbed to 16-year highs after the Federal Reserve last week signaled a hawkish long-term path for interest rates.

"The market is really trying to find some positive news bits to focus on but it's really tough," said Carol Schleif, chief investment officer with the BMO Family Office. "You have the backdrop still of higher rates overall," Schleif said. "You have got oil approaching triple digits, you have got consumer sentiment that’s a little softer. So there is just a compilation of stuff on the headwinds side of the balance sheet."

The Dow Jones Industrial Average fell 267.74 points, or 0.80%, to 33,351.14, the S&P 500 lost 27.72 points, or 0.65%, at 4,245.81 and the Nasdaq Composite dropped 71.47 points, or 0.55%, to 12,992.14. Among S&P 500 sectors, the rate-sensitive utilities group fell the most, down 1.9%. Energy rose 1.8%, as Brent crude breached $97 a barrel, with the jump in oil prices posing a renewed threat to inflation that has been moderating.

The S&P 500 has fallen 7.5% since late July, but remains up over 10% for 2023. In Washington, Republican U.S. House Speaker Kevin McCarthy rejected a stopgap funding bill advancing in the Senate, bringing the government closer to its fourth partial shutdown in a decade.

Data on Wednesday showed orders for long-lasting U.S. manufactured goods rose in August while business spending on equipment appeared to regain momentum after faltering early in the third quarter. "Concern is that the economy is still doing OK, but we need to see some weakness to give interest rates a reason to peak and so far, we're not seeing that," said Paul Nolte, market strategist at Murphy & Sylvest Wealth Management.

Investors are focusing on Friday's monthly personal consumption expenditures price index for a fresh view of inflation. This week also brings second-quarter Gross Domestic Product and remarks from Federal Reserve Chair Jerome Powell. In company news, Costco Wholesale shares rose 1% after the retailer topped market estimates for quarterly revenue and profit.

Declining issues outnumbered advancers by a 1.5-to-1 ratio on the NYSE. There were 42 new highs and 365 new lows on the NYSE. On the Nasdaq, declining issues outnumbered advancers by a 1.1-to-1 ratio on the Nasdaq. The Nasdaq recorded 29 new highs and 282 new lows

 

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