Following the market’s worst day in two years, stocks inched up on Wall Street due to worries about rising interest rates and the potential recession they could bring about.
(AP) NEW YORK — Following the market’s worst day in two years, stocks inched up in morning trading on Wall Street on Wednesday due to worries about rising interest rates and the potential recession they could bring about.
As of 10:13 a.m. Eastern, the S&P 500 was up 0.4%. The benchmark index just had the worst decline it has experienced since June 2020, snapping a four-day gain streak.
The Nasdaq increased by 0.5%, while the Dow Jones Industrial Average increased by 68 points, or 0.2%, to 31,169.
The highest increases were seen in energy companies as U.S. crude oil prices increased by 2.2%. XOM increased by 2.6%.
Bond yields were generally unchanged after Tuesday’s spike. The expectation of more aggressive interest rate increases by the Federal Reserve caused the yield on the two-year Treasury to increase to 3.79% from 3.75% late on Tuesday.
Mortgage rates and other loan rates are influenced by the yield on the 10-year Treasury, which increased to 3.43% from 3.41%.
Even while overall inflation dropped, data on wholesale inflation revealed prices are still rising quickly and pressures are mounting underneath the surface. It replicated a report on consumer inflation released on Tuesday, which increased anticipation of interest rate hikes and sent markets into meltdown.
Wall Street is especially worried that the rate hikes could go too far in slowing the economy and send it into a recession. The Fed is trying to avoid that outcome, but the latest inflation reports reveal that is becoming a more difficult task.
The broader U.S. economy has been slowing, but consumers have remained resilient and the job market remains strong. Wall Street will get another update on inflation’s latest impact on spending when the government releases its retail sales report for August on Thursday.
Wall Street is particularly concerned that the rate increases may slow the economy too much and cause a recession. The Fed is working to prevent that scenario, but the most recent inflation figures show that it is getting harder.
Although the overall U.S. economy has been declining, consumers have held on and the employment market has remained robust. When the government issues its retail sales report for August on Thursday, Wall Street will receive another update on the latest effects of inflation on spending.
While business leaders and government officials prepare for the prospect of a statewide rail strike at the end of this week that may shut down an already chaotic supply chain, the market is also keeping an eye on U.S.-China tensions and the crisis in Ukraine.
Before the strike deadline on Friday, the railroads have already begun to reduce shipments of hazardous commodities and have made arrangements to cease transporting chilled goods. Businesses that depend on the delivery of their raw materials and completed goods by Norfolk Southern, Union Pacific, BNSF, CSX, Kansas City Southern, and other railroads are preparing for the worst.
Officials in the Biden administration are frantically trying to come up with a plan to keep supplies moving if the railroads go dark. A rising number of business organizations are pressing Congress to be ready to step in and prevent a strike if the two parties are unable to agree. The White House is also putting pressure on the two sides to resolve their differences.
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