Stock market today: Wall Street intends to make up big gains for May

NEW YORK (AP) – U.S. stocks are slowing on Wednesday and cutting gains for May, which was on track to be Wall Street’s best month in six years.

The S&P 500 index fell 0.5% in midday trading and continued to fall from the record set last week. The Dow Jones Industrial Average fell 354 points, or 0.9%, as of 11 a.m. ET, and the Nasdaq fell 0.3% a day after setting its latest all-time high.

American Airlines Group sent airline shares tumbling after lowering earnings forecasts and other financial targets in the spring. It said fuel costs may be slightly lower than previously thought, but this is also likely to be a significant revenue trend. It was also announced that commercial director Vasu Raja was leaving the company. He lost 14.7%.

ConocoPhillips fell 2.9% after it said it would buy Marathon Oil in an all-stock deal valuing the company at $22.5 billion, including $5.4 billion in net debt. This is the latest big deal for an industry that has seen several buyout announcements recently. Marathon Oil increased by 9.7%.

Advance Auto Parts fell 6.4% after last quarter’s results and revenues topped analyst expectations. The retailer said the industry started the year slower than expected.

FILE – A person looks at an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo, May 27, 2024. Asian stocks fell mostly on Wednesday, May 29, 2024, after a mixed session on Wall Street following the three-day holiday weekend . (AP Photo/Eugene Hoshiko, file)

Photo: ASSOCIATED PRESS/Eugene Hoshiko

Another rise in long-term Treasury yields also echoed across the stock market, with the 10-year yield rising to 4.60% from 4.54% late Tuesday. It is still low this month, but has dropped below 4.40% since mid-May, but is slowly rising.

Higher Treasury yields hurt prices for all types of investments, but could hit utility and real estate stocks especially hard. When bonds pay higher interest rates, they can scare away income-seeking investors who would otherwise buy these stocks for their relatively large dividends.

Utility stocks in the S&P 500 fell 1.4% as a group, and real estate mutual funds fell 1.2% amid some of the market’s worst losses.

This month’s swings in Treasury yields come as investors recalibrate their expectations about when the Federal Reserve might begin cutting its key interest rate, which is at its highest level in more than two decades.

Wall Street always wants interest rate cuts because they can raise investment prices and remove downward pressure on the economy. However, investors have had to delay their overly optimistic forecasts of interest rate cuts several times this year as inflation has proven stubborn to suppress completely.

The Fed tries to balance the effect of weakening the economy with high interest rates enough to fully control inflation, but not so much that it leads to widespread layoffs.

Despite concerns about cracks in spending by U.S. consumers, especially those with lower incomes, economists at BNP Paribas expect a healthy labor market, slowing inflation and even gains by some cryptocurrency investors to help sustain the economy’s main engine.

“The American consumer has defied the severity of high interest rates and inflation” as well as concerns about an uncertain economy, according to Yelena Shulyatyeva, senior U.S. economist at BNP Paribas.

The U.S. stock market continues to set records despite concerns about continued high interest rates, partly due to the continued rally in shares of companies related to artificial intelligence technology. Nvidia’s latest report of huge profits helped fuel the frenzy even more, but the momentum can’t last forever. The company’s shares fell in morning trading before rising a modest 0.4%, which would be its weakest performance since its earnings report a week ago.

Wall Street’s winner was Dick’s Sporting Goods, which rose 16.4% after beating analyst expectations for earnings and revenue in the latest quarter. The retailer also raised its profit forecast for the full year.

Chewy, the online pet supplies retailer, also reported a bigger-than-expected profit for its latest quarter, with its stock rising 29.6%. It also said it would return up to $500 million to its shareholders by buying back its own shares.

On foreign stock exchanges, indexes fell mainly in Asia and Europe. Hong Kong’s Hang Seng fell 1.8%, South Korea’s Kospi fell 1.7% and France’s CAC 40 fell 1.4%.

Stock markets in Shanghai remained roughly flat after the International Monetary Fund raised its forecast for China’s economic outlook, saying the No. 2 economy will grow at an annual rate of 5% this year. However, she also cautioned that consumer-friendly reforms were needed to maintain strong, high-quality growth.

AP business writers Yuri Kageyama and Matt Ott contributed.