Stock market today: Wall Street falls as the bond market cranks up the pressure

NEW YORK (AP) — Wall Street weakened Wednesday to worsen what’s already been a messy August.

The S&P 500 was 0.7% lower in late trading, following up on its prior day’s loss of 1.2%. The Dow Jones Industrial Average lost 186 points, or 0.5%, to 34,759, as of 3:25 p.m. Eastern time, and the Nasdaq composite fell 1%.

Increased pressure came from the bond market, where yields have recently neared their highest levels since the Great Recession triggered a collapse in interest rates. Yields climbed more following the afternoon release of the minutes from the Federal Reserve’s latest meeting.

The minutes suggested Fed officials are unsure about their next move after catapulting the main interest rate they control to its highest level in two decades. Hopes had been rising among investors that last month’s rate hike by the Fed would prove to be its last.

High rates work to grind down inflation by bluntly slowing the entire economy and hurting investment prices. The Fed’s minutes showed that officials still don’t think the job on inflation is done but that they also acknowledge the risk of going too far and torpedoing the economy. They said they’ll make upcoming decisions based on what data reports about inflation and the economy tell them.

Some analysts took the minutes as a suggestion that another rate hike is possible, while others said it shows the Fed is likely done hiking.

“Ultimately there were no major surprises in the minutes, as the Fed is expected to remain data dependent when determining the path of monetary policy through the end of the year,” said Sam Millette, fixed income strategist for Commonwealth Financial Network.

Big technology stocks and other investments seen as particularly vulnerable to higher rates were some of the day’s heaviest weights on indexes. Tesla fell 2.6%. Facebook’s parent, Meta Platforms, dropped 1.9%, and Amazon fell 1.6%.

Wall Street has generally been retrenching this month on several concerns, including worries that torrid gains made this year through July were overdone and that interest rates may stay high for longer.

A surprisingly strong report on sales at U.S. retailers Tuesday helped cause a slide in stocks, as it suggested upward pressure still exists. While strong economic reports calm long-held worries about a possible recession, they could also end up keeping rates higher for longer.

Data released Wednesday showed that U.S. industrial production improved by more than economists expected last month. Homebuilders also broke ground on more homes.

Treasury yields have been generally climbing as reports paint a picture of a still solid economy. That pressures stocks because when safe bonds are paying more in interest, investors feel less need to take risks with stocks and other investments.

The yield on the 10-year Treasury rose to 4.27% from 4.22% late Tuesday. It’s once again close to where it was in 2007, when the financial crisis sent interest rates crashing. The 10-year yield helps set rates for mortgages and other important loans.

The 10-year Treasury Inflation Protected Security, which takes expected inflation into account, is at its highest level since 2009, according to Tradeweb.

On Wall Street, Intel fell 3.5% after it and Tower Semiconductor agreed to call off Intel’s $5.4 billion buyout of the Israeli chip maker. The deal faced resistance from Chinese regulators.

Agilent Technologies fell 3% despite reporting stronger profit for the latest quarter than analysts expected. Its forecasts for upcoming resuls, including revenue for the full year, fell short of expectations. It pointed to a challenging economy, particularly in China.

Brinker International, owner of the Chili’s chain, fell 4.1%. It reported stronger profit for the latest quarter than expected, but its revenue fell short of forecasts.

Coinbase Global’s stock swung after it said it soon plans to offer futures trading for cryptocurrencies to eligible U.S. customers after receiving federal regulatory approval. It rose in the morning, fell in the afternoon and was back to a 0.5% gain.

Target and TJX, the company behind T.J. Maxx and Marshalls, were pushing upward on the market. Target rose 2.3%, and TJX climbed 4.1% after both reported stronger profit for the spring than analysts expected.

Progressive jumped 8.9% for the biggest gain in the S&P 500 after reporting its results for July, and other insurers also rallied to help lead the market.

In stock markets abroad, indexes were mixed across Europe. Stocks were down more sharply in Asia, where worries are high about a faltering economic recovery in China.

Stocks fell 1.4% in Hong Kong, 1.8% in Seoul, 1.5% in Tokyo and 0.8% in Shanghai.

Coming into this year, the expectation was that China’s economy would grow enough after the government removed anti-COVID restrictions to prop up a global economy weakened by high inflation. But China’s recovery has faltered so much that it unexpectedly cut a key interest rate on Tuesday and skipped a report on how many of its younger workers are unemployed.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.

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