The American flag is shown at the New York Stock Exchange on Wednesday, June 29, 2022 in New York. Stocks shifted between gains and losses on Wall Street Wednesday, keeping the market on track for its fourth monthly loss this year. (AP Photo/Julia Nikhinson)
NEW YORK (AP) — Wall Street is mixed on Monday and holding a bit steadier after sliding for three straight weeks through what’s been a dismal August.
The S&P 500 was up 0.1% in afternoon trading. The Dow Jones Industrial Average was down 141 points, or 0.4%, at 34,361, as of 12:37 p.m. Eastern time, and the Nasdaq composite was 0.8% higher.
Putting more pressure on the stock market were rising yields in the bond market, where the 10-year Treasury yield touched its highest level since 2007 and rose above 4.34% and is hovering around that level. That’s up from 4.25% late Friday and from less than 0.60% in 2020.
Higher yields are good for bond investors, who get paid more in interest for their investments. But it also makes investors less willing to pay high prices for stocks and other investments that are less steady than U.S. government bonds.
A swift rise for yields globally has shaken stock markets worldwide. It’s added to concerns that stock prices overshot during their strong run earlier this year and that signals keep piling higher of China’s faltering economic recovery.
POWELL AT JACKSON HOLE
This week’s main economic event is likely to be a speech on Friday by Federal Reserve Chair Jerome Powell. The Jackson Hole, Wyoming, setting for his speech has been the home of major policy announcements in the past by the Fed, and it’s one of the most important events each year for central bankers globally.
The worry is that Powell will dash investors’ hopes that the Fed has already hiked interest rates for the final time and that its next move will be to cut rates early next year.
The Fed has already pulled its main interest rate to its highest level since 2001 in its effort to grind down high inflation. High rates do that by slowing the entire economy bluntly and hurting prices for investments.
For all the anticipation about Powell’s speech, he may not end up sending a strong signal out of Jackson Hole, according to Goldman Sachs.
In the minutes from its last policy meeting in July, the Fed indicated it was unsure about its next move. It stressed again that it will make its upcoming decisions on rates based on what incoming data says about inflation and the economy.
The week after Powell’s speech, big reports are due for each of those topics. One is the latest monthly update on the Fed’s preferred way of measuring inflation, and the other is the monthly jobs report. “The Fed will likely wait to be informed by these new data before changing their current posture,” Goldman Sachs’ Lexi Kanter and Michael Cahill wrote in a report.
Economists at Bank of America, meanwhile, say there’s a chance Powell will say every upcoming meeting of the Fed has a possibility to see a hike in interest rates given how strong recent economic reports have been.
“We think Powell’s tone at Jackson Hole will be less balanced than the July FOMC minutes,” they wrote in a BofA Global Research report.
The economy has remained remarkably resilient despite much higher interest rates. While the solid job market and spending by U.S. households eases long-held worries about a possible recession, they could also add upward pressure on inflation.
NVIDIA STOCK
Another big event for the market will be Nvidia’s profit report scheduled for Wednesday. The chip maker’s stock has flown higher this year, more than tripling on excitement about demand for artificial-intelligence technology.
Nvidia’s report on Wednesday may offer a hint about whether all the furor was deserved. It rose 4% Monday.
The earnings reporting season for the spring is winding down for S&P 500 companies. The majority have reported better results than feared, as is usually the case. But that’s done little to help support the stock market.
The S&P 500 has dropped nearly 5% in August to given back more than a quarter of its big gains from the first seven months of the year. Technology and other high-growth stocks seen as some of the biggest losers of higher rates have been hit particularly hard.
Tesla, one of those high-growth stocks, rose 5.7% to recover some of its 11% loss from last week.
Security software maker Palo Alto Networks jumped 16.2% for the biggest gain in the S&P 500. The California company reported better profit for the spring than analysts expected late Friday.
But the majority of stocks within the S&P 500 were falling. On the losing end of Wall Street was Nikola, which has recalled more than 200 electric trucks following a couple battery fires. It said it can’t guarantee when it will resume selling the trucks and that it will raise $325 million by selling convertible bonds. It fell 22.2%
Besides the possibility about higher rates for longer, concerns about China’s economic recovery have also weighed on markets globally.
Hong Kong’s Hang Seng tumbled another 1.8% and is down 12.2% for August so far alone. Stocks also fell 1.2% in Shanghai.
China cut a bank lending rate, but the move fell short of what some analysts expected.
Coming into this year, the expectation was for a strong economic recovery by China would help prop up the global economy. The world’s second-largest economy instead has fallen well short of forecasts.
In other markets abroad, stock indexes were modestly higher across Europe and much of Asia outside of China.
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AP Business Writers Matt Ott and Joe McDonald contributed.