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Stock market today: Wall Street drops again as oil prices and stocks worldwide slide

2023-06-23 21:49
Another drop for stocks has Wall Street on track to close out its first losing week in the last six
Stock market today: Wall Street drops again as oil prices and stocks worldwide slide

NEW YORK (AP) — Another drop for stocks on Friday has Wall Street on track to close out its first losing week in the last six.

The S&P 500 was 0.7% lower in early trading, pulling back further from last week when it reached its highest level in more than a year. The Dow Jones Industrial Average was down 238 points, or 0.7%, at 33,707, as of 9:35 a.m. Eastern time, while the Nasdaq composite was 0.9% lower.

Stocks fell even more in markets abroad, while crude oil prices dropped on worries that a global economy under threat of a recession will burn less fuel.

Europe’s economy appears to be weaker than expected, according to a preliminary report measuring manufacturing and services businesses. That’s adding to this week’s hesitance in markets, caused by a crank higher in interest rates by central banks around the world as they try to get high inflation under control. High rates drive down inflation by slowing the economy, which raises the risk of a recession.

High interest rates in the United States have already dragged manufacturing and other industries into contraction, while also helping to cause several failures in the banking system that have rattled confidence. Federal Reserve Chair Jerome Powell said this week that even though his central bank didn’t raise rates last week, it could still push through a couple more hikes by the end of this year.

Critics have also said the U.S. stock market was due for a breather after it climbed too far, too fast following a rally of more than 20% since mid-October.

Much of the exuberance was because the U.S. economy had managed to avoid a recession, even though the Fed hiked rates at a breakneck pace since early 2022. The job market in particular has remained remarkably solid. Wall Street’s hope was also that slowing inflation could get the Fed to take it easier on rates, while a small cadre of stocks soared to incredible heights amid a frenzy around artificial-intelligence technology.

A report later Friday morning is expected to show that growth in the U.S. economy may be slowing. Economists expect the preliminary report from S&P Global to show that manufacturing continued to shrink in June, while growth in the services industries slowed.

A slower economy would likely mean pressure on demand for energy, and the price for a barrel of benchmark U.S. oil fell 2.7% to $67.61. Brent crude, the international standard, lost 2.5%, to $72.46 per barrel.

That helped drag energy stocks to some of the sharpest losses on Wall Street. Halliburton lost 3.1%.

Tech companies were also hit hard. Higher interest rates hurt all kinds of investments, from stocks to bonds to crypto, but high-growth stocks tend to be among the most impacted. A 1.2% drop for Microsoft and 1.6% fall for Tesla were among the heaviest weights on the S&P 500.

In European stock markets, Germany’s DAX lost 1.5%, and France’s CAC 40 fell 0.9%.

On Thursday, the Bank of England hiked its main interest rate by a bigger margin than expected to a 15-year high. It was the central bank’s 13th straight increase. Central banks in Norway, Switzerland and Turkey also raised borrowing rates.

In Asia, Hong Kong’s Hang Seng lost 1.7%.

Japan’s Nikkei 225 dropped 1.7% after its inflation rate came in higher than expected. That added to expectations that its central bank might adjust its policies for ultralow interest rates. The Bank of Japan has kept its benchmark interest rate at minus 0.1% for a decade as policymakers encourage more investment and spending.

In the bond market, yields dropped as investors looked for safer places to park cash amid worries about the economy. The yield on the 10-year Treasury fell to 3.70% from 3.79% late Thursday. It helps set rates for mortgages and other important loans.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.