NEW YORK (AP) โ Wall Street is falling again after a better-than-expected report on the U.S. economy dampened hopes that lower interest rates were coming soon. The S&P 500 was down 0.7% early Wednesday and was headed for a second consecutive decline. The Dow Jones fell 138 points and the Nasdaq composite lost 0.9%. Rising yields in the bond market again put downward pressure on stocks. Yields rose after a report showed sales at U.S. retailers were stronger last month than economists expected, which could keep upward pressure on inflation. That could lead the Federal Reserve to wait longer than traders expect to start cutting rates.
THIS IS A BREAKING NEWS UPDATE. AP's previous story follows below.
Wall Street was headed lower early Wednesday after market declines in Asia and Europe.
Dow Jones Industrial Average and S&P 500 futures each fell 0.4% before the bell rang.
Investors were anticipating upcoming earnings reports, as well as possible actions by the world's central banks, to evaluate their next moves.
S&P 500 companies are likely to report little, if any, fourth-quarter earnings growth from a year ago if Wall Street analysts' forecasts are to be believed. Profits have been under pressure for more than a year due to rising costs amid high inflation.
But optimism is greater for 2024, where analysts forecast strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. That, plus expectations of several interest rate cuts by the Federal Reserve this year, have helped the S&P 500 rack up 10 winning weeks in the last 11. The index remains within 0.6% of its peak history established two years ago.
For now, traders are projecting far more rate cuts through 2024 than the Federal Reserve itself has indicated. That raises the potential for big market swings around each Fed official's speech or economic report.
Japan's benchmark Nikkei 225 index gave up earlier gains due to profit-taking and ended down 0.4% at 35,477.75. Earlier in the day, the Nikkei hit a new 34-year high, or the best since February 1990, during the so-called financial โbubble.โ Buying had focused on semiconductor-related stocks and a cheap yen helped fuel some exporters' woes.
Chinese official data released on Wednesday showed that the Chinese economy grew 5.2% by 2023, surpassing the target of โaround 5%โ that the government had set. That growth was likely aided by GDP of just 3% in 2022 as China's economy slowed due to COVID-19 and nationwide lockdowns during the pandemic.
"Investor expectations for China's economic growth have diminished," said Stephen Innes, managing partner at SPI Asset Management. "The headwinds China's economy will face in 2023 have not abated and the geopolitical environment may become more contentious."
In energy trading, benchmark U.S. crude lost $1.72 to $70.68 a barrel. Brent crude, the international standard, fell $1.64 to $76.65 a barrel.
In currency trading, the US dollar rose to 147.96 Japanese yen from 147.09 yen. The euro cost $1.0854, down from $1.0880.
In Europe at midday, Germany's DAX lost 1%, while France's CAC40 was down 1.1% and Britain's FTSE 100 fell 1.7%.
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