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 150 points, or 0.4%. The S&P 500 shed 0.6%. The technology-focused Nasdaq Composite dipped 0.8%.
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.
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The selling on Wednesday was broad based, with losses in growth names and those tied to the economic recovery.
American Airlines and JetBlue led reopening plays lower, falling 2.5% each following a downgrade by Goldman Sachs. Goldman cited higher fuel prices and slower near-term demand.
Tech shares were also taking hits with Facebook and Apple both lower by more than than 1%.
Recent increases in energy prices and interest rates are raising concerns about higher costs for consumers and companies. The 10-year Treasury yield was higher again Wednesday to above 1.55%, 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 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.
It was a reversal of Monday’s session when the market saw a broad advance with nine out of 11 S&P 500 sectors closing positive on Tuesday. The Dow gained nearly 1%. The S&P 500 rose 1.05% and the Nasdaq Composite rallied 1.25%.
Mega-cap tech stocks closed higher Tuesday after being knocked down the prior trading session. Facebook stayed in focus following a lengthy outage and claims by a whistleblower that the company knows it’s harming people.
The financial sector finished Tuesday as the best performing segment of the S&P 500, up 1.78%. Other sectors geared toward a recovering economy also saw shares rise. Energy names gained as oil prices climbed. Cruise, airline and retail stocks also advanced.
A better-than-expected manufacturing reading Tuesday aided optimism about the economic recovery. The Institute for Supply Management’s services purchasing managers’ index report for September rose to 61.9 from 61.7 in August, 0.2 points better than expected.
“Investors lean into risk on the back of another strong business sentiment survey that may suggest that the Delta-driven growth slowdown of late summer is already a thing of the past,” Goldman Sachs’ Chris Hussey said in a note Tuesday.
