Stocks fall broadly on Wall Street; Southwest losses mount
Stocks fell broadly in midday trading on Wall Street Wednesday as investors count down to the end of the worst year for the S&P 500 since 2008.
The S&P 500 fell 0.7% as of 11:48 a.m. Eastern. The Dow Jones Industrial Average fell 187 points, or 0.6%, to 33,049 and the Nasdaq fell 1.1%.
Bond yields were mixed. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.88% from 3.85% Tuesday. The yield on the two-year Treasury fell to 4.37% from 4.38% late Tuesday.
The benchmark S&P 500 is headed for a 20% drop in 2022, while the Dow is on pace for a 9% drop, even as profits and margins for the S&P 500 have hit record heights this year. The tech-heavy Nasdaq is doing much worse and is on pace to plunge 34%.
Investors are in the middle of a mostly quiet and holiday-shortened week. Markets were closed on Monday for the observed Christmas holiday and there are no major economic reports expected this week. Every major index is on track for sharp losses this year.
A report from the National Association of Realtors showed that the housing market continued cooling amid high prices and steeper interest. Pending home sales fell 4% in November.
The report weighed down homebuilders. Toll Brothers fell 1.1%.
U.S. crude oil prices fell 1.5% and natural gas prices plunged 11%. That hurt energy stocks. Hess fell 2.3%.
Southwest Airlines shed 2.4% as the carrier's dramatic trouble with flight cancellations continued. Other airlines also fell. Delta Air Lines shed 1.8%.
Tesla rose 0.8% as it stabilized from steep losses it suffered after reports Tuesday that it temporarily suspended production at a factory in Shanghai.
The Chinese government announced late Tuesday that it will start issuing new passports, a major step away from anti-virus travel barriers that likely will bring a flood of tourists out of China for next month’s Lunar New Year holiday. China has already said it will drop most of its COVID-19 travel restrictions next month.
Hong Kong’s Hang Seng climbed 1.6%, while the Shanghai Composite index dropped 0.3%.
Markets in Europe were mostly lower.
Wall Street remains on edge and will likely continue dealing with volatile trading as the Federal Reserve continues its fight against stubbornly hot inflation. The Fed and other central banks have been raising interest rates to stifle borrowing and slow spending in order to tame inflation. The strategy, though, risks slowing the economy too much and bringing on a recession.
The Fed has already raised its key interest rate seven times this year and is expected to continue raising rates in 2023. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers forecast that the rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.
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Elaine Kurtenbach contributed to this report.