US Stocks Mostly Close Lower Thursday 06/17 15:39
The S&P 500 ended Thursday barely changed after stocks sloshed around in
mixed trading, as investors make preparations for a future where the Federal
Reserve is no longer doing everything it can to keep interest rates super low.
NEW YORK (AP) -- The S&P 500 ended Thursday barely changed after stocks
sloshed around in mixed trading, as investors make preparations for a future
where the Federal Reserve is no longer doing everything it can to keep interest
rates super low.
Markets around the world were mixed but mostly calm after investors in Asia
and Europe got their first chance to react to the Federal Reserve's signaling
on Wednesday that it may start raising short-term interest rates by late 2023.
The Fed's chair also said it began discussing the possibility of slowing its
bond-buying program. Such support has been a key reason for the stock market's
resurgence to records, with the most recent coming Monday.
The S&P 500 slipped 1.84 points, or less than 0.1%, to 4,221.86 after
earlier meandering from a 0.2% gain to a 0.7% loss. Most of the stocks in the
index and across Wall Street were lower, but gains for Apple, Microsoft and a
few other tech heavyweights helped offset the losses.
The Dow Jones Industrial Average dropped 210.22, or 0.6%, to 33,823.45,
while the Nasdaq composite rose 121.67, or 0.9%, to 14,161.35, lifted by the
gains for tech and other high-growth stocks.
In the bond market, the yield on the 10-year Treasury note gave back nearly
all of its spurt from a day before. It fell back to 1.51% from 1.57% late
The two-year yield, which tends to move more with expectations for Fed
actions, was steadier. It rose to 0.22% from 0.21%.
The first action the Fed is likely to take would be a slowdown in its $120
billion of monthly bond purchases, which are helping to keep mortgages cheap,
but the Fed's chair said such a tapering is still likely "a ways away."
Any easing up on the Fed's aid for the economy would be a big change for
markets, which have feasted on easy conditions after the central bank slashed
short-term rates to zero and brought in other emergency programs.
While the economy still needs support, the recovery is proving to be strong
enough that it does not need the same emergency measures taken at the beginning
of the pandemic, said Stephanie Link, chief investment strategist and portfolio
manager at Hightower.
"We are going to get a taper," she said. "They need to, we do not need
emergency stimulus at this point."
The economy has begun to explode out of its coma as more widespread
vaccinations help the world get closer to normal. At the same time, jumps in
prices for raw materials are forcing companies across the economy to raise
their own prices for customers, from fast food to used cars.
That's fueling concerns about inflation. Much of the concern is whether
rising inflation will be temporary, as the Fed expects, or more long-lasting.
The reality could be more mixed. The rise in commodity prices is likely tied to
increases in demand as the economy recovers, but rising wages will likely be
longer lasting as employers increase pay in order to attract workers, Link said.
Investors got a bit of disappointing economic news when the Labor Department
said the number of Americans who filed for unemployment benefits last week rose
slightly. The total of 412,000 workers filing for jobless benefits was worse
than economists expected. If it proves to be a trend rather than an aberration,
it could push the Fed to hold the line longer on its support for the economy.
Stocks of companies whose profits are most closely tied to the strength of
the economy and to interest rates had some of the market's sharpest losses.
Energy stocks in the S&P 500 fell 3.5% after the price of crude oil sagged.
Banks struggled after the drop in longer-term yields hurt prospects for the
profits they can make from lending. Bank of America fell 4.4%, and JPMorgan
Chase lost 2.9%.
Raw-material producers were also weak, with miner Newmont down 7% after the
price of gold fell 4.7%. Gold tends to struggle when the Federal Reserve is
raising interest rates.
On the winning side were big tech-oriented companies, which have dominated
the stock market for years as they've continued to grow almost regardless of
the economy's strength. Amazon rose 2.2%, Microsoft gained 1.4% and Apple added
Homebuilder Lennar rose 3.6% after reporting second-quarter profit and
revenue that beat Wall Street forecasts.
In Europe, German and French stocks ticked modestly higher, while the FTSE
100 in London slipped 0.4%. In Asia, Japan's Nikkei 225 fell 0.9%, and South
Korea's Kospi lost 0.4%, but Hong Kong's Hang Seng rose 0.4%.