Abigail Summerville
NEW YORK (Reuters) – U.S. stocks fell on Wednesday as Treasury yields continued to rise and concerns about the timing and extent of a possible interest rate cut by the Federal Reserve.
The Dow fell more than 1% to its lowest level in nearly a month. All sectors also completed declines, with rate-sensitive utilities among the sectors with the largest declines.
The yield on the benchmark 10-year U.S. Treasury note hit a four-week high of 4.6%, extending Tuesday’s gains after weak debt auctions.
“You continue to see rising bond yields, which is putting pressure on stocks… It’s a continuation of this fragile, uneven recovery,” said James Abate, fund manager at Center American Select Equity.
Conflicting expectations about the size and timing of potential interest rate cuts have kept the market on edge since the beginning of this year.
Persistent inflation and hawkish comments from central bankers led traders to soften expectations for a rate cut to one by November or December, according to the CME FedWatch Tool, after several cuts expected earlier in the year.
Stocks held their losses after the publication of the Beige Book, a study by the US Federal Reserve. It showed that economic activity in the US continued to grow from early April to mid-May, but companies became more pessimistic about the future, while inflation rose at a moderate pace.
The S&P 500 lost 39.09 points, or 0.74%, to 5,266.95, while the S&P 500 lost 99.30 points, or 0.58%, to 16,920.58. The stock fell 411.32 points, or 1.06%, to 38,441.54.
Much of the focus this week will be on Friday’s release of April personal consumer spending data, the Fed’s preferred measure of inflation.
The Nasdaq fell after closing above 17,000 for the first time Tuesday, and the small-cap index fell 1.5%.
Shares of Salesforce (NYSE:) fell more than 15% in after-hours trading as the company reported results and forecast second-quarter revenue below estimates. Salesforce shares ended the next session up 0.7%.
During the next session of the action Marathon oil Shares (NYSE:) rose 8.4% after ConocoPhillips (NYSE:) said it would buy the company in an all-stock deal for a market value of just over $15 billion. ConocoPhillips shares fell 3.1%. The energy sector fell 1.8%.
Airline stocks fell, led by American Airlines (NASDAQ:), which fell 13.5% after the company cut its profit forecast for the second quarter.
Dick’s Sporting Goods (NYSE:) rose 15.9% after raising its full-year sales and profit forecasts, while Abercrombie & Fitch jumped 24.3% as it raised its full-year sales growth forecasts.
Declining issues outnumbered advancing ones on the Nasdaq by a 2.78-to-1 ratio and on the NYSE by a 5.25-to-1 ratio.
The S&P 500 posted 7 new 52-week highs and 16 new lows, while the Nasdaq Composite posted 45 new highs and 149 new lows.
Volume on U.S. exchanges was 12.24 billion shares, compared with the full-session average of 12.38 billion over the past 20 trading days.