The S&P 500 fell 8.77 points, or 0.2%, to end at 4,446.82, moving away from its highest level since April 2022. The Dow Jones industrial average fell 129.83 points, or 0.4%, to settle at 34,288.64, and the Nasdaq Composite lost 25.12 units, or 0.2%, to close at 13,791.65.
Other world markets fell more sharply after the latest discouraging sign from the Chinese economy. Growth in China’s service industry slowed last month above economists’ expectations. It is the latest evidence to show that the world’s second-largest economy is floundering in its recovery after the removal of COVID-19 restrictions.
The US economy, for its part, has remained stronger than many investors anticipated. It has defied predictions of a recession thanks to a job market that has remained remarkably strong despite much higher interest rates aimed at reducing inflation.
A report released Wednesday showed US factory order growth held steady through May, though economists had expected an acceleration.
Hopes have been rising that inflation will subside enough for the Federal Reserve to soon halt its interest rate hikes, which undermine inflation by slowing the entire economy. At its last meeting, the Fed decided to hold rates steady, the first time in more than a year that it has not ordered an increase.
Some Federal Reserve officials wanted to raise rates at the last meeting, according to minutes from the June meeting that were released Wednesday. However, the vote was unanimous to keep the federal funds rate unchanged within a range of 5% to 5.25%, compared with virtually zero early last year.
Much of Wall Street expects the Federal Reserve to raise interest rates later this month. What is less certain is a second hike later in the year, as the Fed has been hinting at. In the end, that may not matter much, said Ross Mayfield, investment strategist at Baird.
“Going from zero to 5% is the only thing that matters,” Mayfield said. “Either the Fed has gone too far and hurt the economy, and we haven’t seen it yet, or they haven’t.”
“We’ll see in due course,” he added, saying one or two more quarter-point increases won’t have as much impact on their own.
Returns were mixed in the fixed income market. The yield on the 10-year Treasury rose to 3.92%, from 3.86% on Monday.
The markets fell 0.3% in Japan, 0.6% in South Korea, 0.8% in France and 0.6% in Germany.
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Associated Press writers Matt Ott and Joe McDonald contributed to this report.
FUENTE: Associated Press
