Stock Market Today: Asian stocks track retreat on Wall Street

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI) on the left and the U.S. dollar to South Korean won exchange rate in a trading room at the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, May 30, 2024. (AP Photo/ Ahn Young-joon)

Asian stocks fell on Thursday after U.S. stocks fell on higher bond market yields, with the Dow Jones Industrial Average shedding more than 400 points.

Tokyo’s benchmark Nikkei 225 fell 1.5% to 37,980.55 and Hong Kong’s Hang Seng fell 0.6% to 18,362.23.

The Shanghai Composite Index rose less than 0.1% to 3,113.06.

Australia’s S&P/ASX 200 index fell 0.4% to 7,632.10, while Seoul’s Kospi fell 0.9% to 2,652.98.

Taiwan’s Taiex lost 0.8%.

“Hotter and stiffer-than-expected global inflation appears to be taking the air out of asset markets,” Mizuho Bank said in a commentary. “In other words, Goldilocks is falling apart. And concerns about the adverse impact of higher rates on demand,” they wrote.

On Wednesday, the S&P 500 index fell 0.7% to 5,266.95, limiting gains for May, which was expected to be the best month since November. Four of the five companies included in the index lost value.

The Dow industrials lost 1.1% to 38,441.54 and the Nasdaq Composite fell 0.6% to 16,920.58 after setting a recent all-time high.

American Airlines Group sent airline shares tumbling after lowering earnings forecasts and other financial targets in the spring. The carrier said fuel costs may be slightly lower than previously thought, but there will likely be a significant revenue trend as well. Shares fell 13.5%.

ConocoPhillips fell 3.1% 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 8.4%.

Advance Auto Parts fell 11% after last quarter’s results and revenues topped analyst expectations.

Another rise in long-term Treasury yields also weighed on the stock market, with the 10-year Treasury yield rising to 4.61% from 4.54% late Tuesday after an auction of $44 billion in seven-year Treasury bonds.

The 10-year bond yield remains low this month but has been slowly rising since dipping below 4.40% in mid-May. Higher yields on treasury bonds negatively affect the prices of all types of investments.

Yield swings this month also came 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.

Amid persistently higher inflation, investors have been forced to delay their overly optimistic forecasts of interest rate cuts several times this year.

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.

The Fed’s report released Wednesday said it heard from businesses and other contacts across the country that consumers oppose further price increases. This, in turn, eats into corporate profits as their own insurance costs and other expenses continue to rise.

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.

U.S. stocks continue to break record highs despite concerns about continued high interest rates, in part because of the continued rise in shares of AI-related companies. Nvidia’s latest report of massive profits has helped fuel the frenzy even further. After a brief decline in morning trading, it rose 0.8% on Thursday, the most modest gain since the earnings report.

Wall Street’s winner was Dick’s Sporting Goods, which rose 15.9% 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 27.1%.

In other trading, benchmark U.S. crude rose 11 cents to $79.34 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, the international standard, rose 8 cents to $83.51 a barrel.

The U.S. dollar fell to 157.42 Japanese yen from 157.65 yen. The euro fell to $1.0800 from $1.0803.

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AP Business Writer Stan Choe contributed.