Stocks declined on Wednesday as October continued its volatility amid concerns about rising rates, higher inflation, the state of the reopening and the debt limit.
The Dow Jones Industrial Average fell 125 points, dragged down by a 3% loss in Dow Inc. The S&P 500 shed 0.2%. The technology-focused Nasdaq Composite was little-changed.
Stocks moved off session lows after a report said that Senate Minority Leader Mitch McConnell told a closed meeting of Republicans that he would offer a short-term debt ceiling extension later Wednesday. That would help relieve some pressure on Congress to avoid a U.S. default currently expected on Oct. 18.
After significant tech selling earlier in the day, investors bought into some key tech stocks like Microsoft, Amazon and Nvidia.
Shares of stocks tied to the economic reopening drifted lower. American Airlines and JetBlue led reopening plays lower, falling 4% each following a downgrade by Goldman Sachs. Goldman cited higher fuel prices and slower near-term demand.
So far in the three prior trading sessions of October, the Dow has gained 483 points, lost 324 points and on Tuesday, jumped 312 points.
“Well, October is sure living up to its reputation as the most volatile month of the year. We expect the October roller-coaster market to stick around for a bit longer,” said Ryan Detrick of LPL Financial.
Recent increases in energy prices and interest rates are raising concerns about higher costs for consumers and companies. The 10-year Treasury yield was flat Wednesday around 1.52%, after topping 1.56% last week. Oil prices hit the highest since 2014 this week with WTI crude oil nearly topping $80 a barrel.
September’s ADP report showed that private companies hired at a faster clip than expected last month, despite worries about the delta variant. Private jobs rose by 568,000 for the month, better than the Dow Jones estimate from economists of 425,000.
Wednesday’s report initially sent bond yields higher, unnerving investors about rates and inflation and how soon the Federal Reserve will begin removing policy stimulus. The report could set the tone ahead of the closely followed nonfarm payrolls report on Friday from the Labor Department.
Investors are also monitoring progress in Washington on the debt ceiling. Treasury Secretary Janet Yellen told CNBC on Tuesday the U.S. would fall into a recession if Congress failed to raise the debt ceiling before an Oct. 18 deadline.
Tuesday marked a broad advance with nine out of 11 S&P 500 sectors closing positive. The Dow gained nearly 1%. The S&P 500 rose 1.05% and the Nasdaq Composite rallied 1.25%.