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Stocks fell broadly Wednesday on Wall Street, erasing most of their gains for the week, as investors were discouraged to see more evidence of inflation’s effects on businesses and another gloomy outlook on the global economy.
The losses follow several bumpy days for markets, with major indexes often lurching between gains and losses by the hour. The volatility persists as investors try to determine how rising interest rates and inflation will affect the economy.
The Standard & Poor's 500 index fell 44.91 points, or 1.1%, to 4,115.77. The benchmark index managed to hold on to a slight gain for the week. It has notched losses for eight of the last nine weeks.
The Dow Jones industrial average fell 269.24 points, or 0.8%, to 32,910.90 and the Nasdaq composite fell 88.96 points, or 0.7%, to 12,086.27.
Banks and industrial companies were among the biggest weights on the broader market. Wells Fargo fell 1.8% and Union Pacific shed 3.1%. Some technology stocks also fell. Intel lost 5.3%.
Smaller-company stocks fell more than the rest of the market. The Russell 2000 fell 28.56 points, or 1.5%, to 1,891.01.
Bond yields rose. The yield on the 10-year Treasury, which banks use to set rates on mortgages and other loans, rose to 3.02% from 2.97% late Tuesday.
The big concerns on Wall Street continue to be inflation and whether the Federal Reserve’s shift to aggressively raise interest rates will help temper the effects or possibly push the economy into a recession.
“What investors need to realize is it’s going to be a long time until inflation numbers look good,” said Brian Levitt, global market strategist at Invesco. “What they need to focus on is whether it gets better or worse related to expectations.”
Inflation continues to sting businesses. Lawn care products company Scotts Miracle-Gro slumped 8.9% after slashing its profit forecast for the year because retailers aren’t replenishing orders as expected. Retailers have been warning that inflation is crimping sales as consumers shift to either spending on services or focusing on necessities rather than purchasing otherwise discretionary items such as electronics.
The blow from inflation has only been worsened by Russia’s invasion of Ukraine, which has put more pressure on energy and food prices since February. U.S. crude oil prices rose 2.3% on Wednesday and are up 63% for the year, while wheat prices are up 39% in 2022. Supply chains have also gotten tighter after a series of lockdowns for Chinese cities fighting COVID-19 cases.
“As long as commodity prices remain elevated, it's going to be more difficult to see headline inflation come down,” Levitt said.