Stock Market Today: Stocks Fall as Inflation Fears Ramp Up
The latest economic data and a continued rise in oil prices sparked worries of higher inflation and more rate hikes.
Stocks closed lower again Wednesday as rising oil prices and good-news-is-bad-news economic data weighed on investor sentiment. Rate-sensitive tech and tech-adjacent stocks were some of the day's biggest losers as Treasury yields rose.
The main benchmarks opened in negative territory and stayed there for the entire session. At the close, the Dow Jones Industrial Average was down 0.6% at 34,443, the S&P 500 was off 0.7% at 4,465, and the Nasdaq Composite was 1.1% lower at 13,872.
Mega-cap tech stock Apple (AAPL) – which carries an outsized weighting in both the S&P 500 and Nasdaq – slumped 3.6% amid media reports that China is widening the scope of government workers that are not allowed to use iPhones and other foreign-branded devices while at work. China is one of Apple's largest markets, accounting for more than 19% of total sales in its most recently reported quarter.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Analysts are still overwhelmingly bullish on the blue chip stock. Of the 45 analysts covering AAPL tracked by S&P Global Intelligence, 22 say it's a Strong Buy, eight have it at Buy, 13 call it a Hold and two believe it's a Sell. This works out to a consensus Buy recommendation.
ISM services sector index hits six-month high
Also keeping stocks lower today was the Institute for Supply Management's services sector index, which jumped to a higher-than-expected 54.5% in August from 52.7% in July. This was the eighth straight month the index reading was above the 50% mark that indicates expansion and was the highest level since February.
"The ISM services sector report underscores the resilience of the largest portion of the economy as the headline print came in higher than expectations, underpinned by a stronger new orders metric," says Quincy Krosby, chief global strategist for LPL Financial. The report is "certainly not good news for a data dependent Fed," Krosby adds, and with "oil and food prices also higher, this report points to a Fed whose job to quell inflation is certainly not yet quite finished."
Oil prices keep rising
Taking a look at those oil prices, they continued to climb today following this week's news that Saudi Arabia and Russia will extend crude production cuts for the next several months. U.S. crude futures jumped 1% to $87.54 per barrel, their highest settlement since June 2022.
Oil prices are now up nearly 11% in the past two weeks – and more upside could temporarily halt the disinflation trend we've seen in recent months. "Going forward, higher oil prices are likely to support overall inflation and have a less direct but nonetheless notable impact on core inflation," says José Torres, senior economist at Interactive Brokers.
As for the impact today's economic data and rising oil prices have on rate-hike expectations, futures traders are now pricing in a 93% probability the Fed will keep interest rates unchanged at its September meeting, up from yesterday's 90%, according to CME Group. Chances for a November rate hike ticked slightly higher, to 45.3% from 42.0%.
Related content
To continue reading this article
please register for free
This is different from signing in to your print subscription
Why am I seeing this? Find out more here
With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
-
Stock Market Today: Stocks Soar on Apple Buyback News, Jobs Data
The main indexes rallied hard to end the week thanks to Apple's $110 billion stock repurchase plan and a big April payrolls miss.
By Karee Venema Published
-
Three 'Hidden Costs' of Health Savings Accounts (HSAs)
Health Savings HSAs offer valuable tax benefits, but can 'hidden costs' erode those advantages?
By Kelley R. Taylor Last updated
-
Stock Market Today: Stocks Soar on Apple Buyback News, Jobs Data
The main indexes rallied hard to end the week thanks to Apple's $110 billion stock repurchase plan and a big April payrolls miss.
By Karee Venema Published
-
Stock Market Today: Stocks Sizzle Ahead of Apple Earnings, Jobs Report
The Nasdaq outperformed in a strong day for stocks thanks to Qualcomm's post-earnings pop.
By Karee Venema Published
-
Stock Market Today: Stocks Pop Then Drop After Fed Meeting
Stocks went on a roller-coaster ride after Fed Chair Powell said interest rates were likely at a sufficiently restrictive level.
By Karee Venema Published
-
Fed Holds Rates Steady at 23-Year High: What the Experts Are Saying
Federal Reserve The Federal Reserve struck a dovish pose even as it kept interest rates unchanged for a sixth straight meeting.
By Dan Burrows Published
-
Stock Market Today: Stocks Sell Off Ahead of Fed Decision
Stocks sold off sharply Tuesday as anxiety set in ahead of Wednesday's policy statement from the Federal Reserve.
By Karee Venema Published
-
Stock Market Today: Markets Post Broad-Based Gains Thanks to Mega-Cap Tech
Stocks get help from a couple of laggard Magnificent 7 stocks.
By Dan Burrows Published
-
Stock Market Today: Markets Soar Amid Strong Earnings for Big Tech
Equities ended the week on an up note thanks to some of the market's biggest names.
By Dan Burrows Published
-
Stock Market Today: Markets Tumble Amid Slower Economic Growth and Rising Prices
Disappointing readings on GDP and inflation helped tank equities.
By Dan Burrows Published