NEW YORK: US stocks reversed course in Jan 19’s trading session, ending lower for the second day amid rising oil prices and fears that the Federal Reserve will have to move more aggressively to contain inflation.
The see-saw day started out upbeat following a good batch of earnings reports from Procter & Gamble and other companies, but shares tumbled after midday.
The benchmark Dow Jones Industrial Average fell nearly 340 points, or 1%, to finish at 35,028.65.
The broad-based S&P 500 also dropped 1% to end at 4,532.76, while the tech-rich Nasdaq Composite Index fell 1.2% to 14,340.25, and is about 10% below its November record.
Meanwhile, oil prices continued to march towards US$100 a barrel, with West Texas Intermediate (WTI) at US$86.60 in late afternoon trading, 1.4% higher.
“I think that a lot of the stocks that have been doing very well over the past couple of weeks like food, energy, financials are running out of steam,“ Tom Cahill of Ventura Wealth Management told AFP.
And amid the prospect of rising borrowing rates, “you are getting a little bit of bargain hunting in some of the technology stocks.”
Investors were spooked on Jan 18 as the yield on the 10-year Treasury note jumped above 1.85%, amid expectations the Fed could hike interest rates as many as four times this year. The rate, a proxy for the interest rate outlook, remained near that level on Jan 19.
Cahill called the move “a little frightening” even though markets had already factored in rising rates and the increased likelihood the Fed will begin to sell off some of its massive bond holdings.
Amid firms reporting earnings, Procter & Gamble jumped 3.4% after it raised its full-year forecast following strong results as robust consumer demand fueled higher sales even though the company increased prices on consumer goods.
Bank of America gained 0.4% and Morgan Stanley won 1.8% after both companies reported higher quarterly profits. Mixed results from other financial giants have weighed on the stock market in recent days. – AFP