Stocks Near Bear Market, End Lower 05/19 15:52
Another volatile day on Wall Street ended with more losses for stocks
Thursday, drawing the S&P 500 closer to its first bear market since the
beginning of the pandemic.
NEW YORK (AP) -- Another volatile day on Wall Street ended with more losses
for stocks Thursday, drawing the S&P 500 closer to its first bear market since
the beginning of the pandemic.
The index, a benchmark for many funds, fell 0.6% after easing off a deeper
stumble. The latest decline came a day after the S&P 500 had its biggest drop
in nearly two years. It's now down 18.7% from the record high it set early this
year and is nearly at the 20% threshold that defines a bear market.
The Dow Jones Industrial Average fell 0.8% and the Nasdaq slipped 0.3%.
The indexes have remained mired in a deep slump as investors worry that the
soaring inflation that's hurting people shopping for groceries and filling
their cars up is also walloping profits at U.S. companies. Target fell again, a
day after losing a quarter of its value on a surprisingly large drop in
The latest pullback is further indication "that the market is trying to find
direction," said Lindsey Bell, chief markets and money strategist at Ally
Invest. "There's just still a significant amount of uncertainty, especially in
regard to what the (Federal Reserve) is going to do, how that's going to impact
growth in the future, and additionally, where the heck is inflation going from
The S&P 500 fell 22.89 points to 3,900.79. The Dow dropped 236.94 points to
31,253.13. The Nasdaq slid 29.66 points to 11,388.50. The three indexes are on
pace to extend a string of at least six weekly losses.
Smaller company stocks held up better than the broader market. The Russell
2000 rose 1.38 points, or 0.1%, to 1,776.22.
Rising interest rates, high inflation, the war in Ukraine and a slowdown in
China's economy have caused investors to reconsider the prices they're willing
to pay for a wide range of stocks, from high-flying tech companies to
traditional automakers. Investors have been worried that the soaring inflation
that's hurting people shopping for groceries and filling their cars up is also
walloping company profits.
Target fell another 5.1% a day after losing a quarter of its value on a
surprisingly weak profit report.
Wall Street is also worried about the Federal Reserve's plan to fight the
highest inflation in four decades. The Fed is raising interest rates
aggressively and investors are concerned that the central bank could cause a
recession if it raises rates too high or too quickly.
The 10-year Treasury pulled back to 2.85% from 2.88% late Wednesday, but it
has been generally rising as investors prepare for a market with higher
interest rates. That has also pushed up mortgage rates, which is contributing
to a slowdown in home sales.
The pile of concerns on Wall Street has made for very choppy trading and big
swings between gains and losses within any given day.
Technology stocks have been some of the most volatile holdings. The sector
includes heavyweights like Apple that have lofty valuations, which tend to push
the market more forcefully up or down. The sector has been hit especially hard
by the Fed's policy shift to raise interest rates. Low rates help support
investments considered more risky, like tech stocks, and higher rates lessen
the incentive to take that risk.
Technology stocks fell Thursday, accounting for a big share of the S&P 500's
drop. Cisco Systems slumped 13.7% after the seller of routers and switches cut
its profit forecast amid supply chain constraints. Synopsis jumped 10.3% after
the software company raised its financial forecasts for the year.
Household goods companies, grocery store operators and food producers fell
broadly. General Mills fell 2.1% and Clorox fell 5.3%.
Retailers and other companies that rely on direct consumer spending mostly
rose. Amazon added 0.2% and Expedia climbed 5.3%. Bath & Body Works slid 6.8%
after cutting its profit forecast for the year.
With the S&P 500 closing moderately lower, the index is now closer to
falling into a bear market. The last bear market happened just two years ago,
following the onset of the virus pandemic.
Why use a bear to denote a market slump? Bears hibernate, so they represent
a market that's retreating, said Sam Stovall, chief investment strategist at
CFRA. In contrast, Wall Street's nickname for a surging stock market is a bull
market, because bulls charge.