Yields could shake later in the morning when reports are due on consumer confidence, sales of new homes and manufacturing.
While housing and manufacturing have felt the sting of high interest rates, the economy overall has held up well enough to raise worries that upward pressure still exists on inflation. That pushed the Fed last week to say it will likely cut interest rates by less next year than earlier expected. The Fed’s main interest rate is already at its highest level since 2001 in its drive to get inflation back down to its target.
Besides high interest rates, a long list of worries is also tugging at Wall Street. The most immediate isas Capitol Hill threatens another stalemate that would shut off federal services across the country. Wall Street has dealt with such shutdowns in the past, and stocks have historically been turbulent in the runup to them, according to Lori Calvasina, strategist at RBC Capital Markets.After looking at the seven shutdowns that lasted 10 days or more since the 1970s, she found the S&P 500 dropped an average of roughly 10% in the three months heading into them. Stocks managed to hold up rather well during the shutdowns, falling an average of just 0.2%, before rebounding meaningfully afterward.
Besides the threats of higher interest rates for longer and a possible federal shutdown, Wall Street is also contending with higher oil prices, shaky economies around the world,that could put more upward pressure on inflation and a resumption of U.S. student-loan repayments that could dent spending by households.Big Tech stocks were the heaviest weights on the market. They tend to be among the hardest hit by high rates, and Apple and Microsoft both slipped 0.9%.
Cintas dropped 2.8% for one of the larger losses in the S&P 500. The provider of employee uniforms, mops, fire extinguishers and other items reported stronger profit for its latest quarter than analysts expected. It also raised its forecasts for revenue and profit for the full fiscal year, but still within a range that many analysts earlier expected.
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