Stock market today: Wall Street joins the global crisis

NEW YORK (AP) Stocks slipped on Wall Street on Wednesday as concerns grew about the strength of the global economy and the frenzy around artificial intelligence cooled.

The S&P 500 was down 0.7% in morning trade. The Dow Jones Industrial Average was down 228 points, or 0.7%, at 32,814 as of 10:15 a.m. EST, while the Nasdaq composite was down 0.5%.

Stock markets in Asia fell even further after discouraging data on manufacturing from China. The world’s second-largest economy did not rebound as strongly as many investors had hoped. That raises concerns as economies around the world grapple with still-high inflation and much higher interest rates than a year earlier.

Wall Street has been able to ride out those worries quite well recently, thanks in large part to strong gains from big tech companies and others who got caught up in the buzz around AI. The S&P 500 is still on track for a modest gain in May, which would be its third consecutive gaining month.

But some air escaped from these big winners on Wednesday. Nvidia, whose chips are helping fuel the surge in AI, fell 2.1% and is heading for its first plunge since giving a monster forecast last week for upcoming sales. It has already more than doubled this year and was flirting with a total value of $1 trillion a day earlier.

Advance Auto Parts plunged 32.2% after reporting much weaker earnings for the last quarter than analysts expected. The retailer also said it expects the pressures to continue through 2023, and it cut its full-year financial forecast and cut its dividend.

Hewlett Packard Enterprise fell 7.2% after reporting weaker-than-expected revenue for the last quarter. HP fell 3.3% after its revenue also fell below forecasts.

Earnings for S&P 500 companies were significantly better than analysts feared for the first three months of the year. But they were still down from the previous year.

They are grappling with an economy that has already begun to slow under the weight of interest rates that the Federal Reserve has raised in hopes of bringing inflation under control.

Many traders are bracing for the Fed to raise rates again at its next meeting in two weeks, but the hope is that it may be the last after a furious streak of raising rates at every meeting. for over a year. Higher rates can reduce inflation, but by slowing the economy and hurting investment prices.

Several labor market reports this week could influence the Fed’s decision. A published Wednesday morning showed that employers announced more job openings last month than expected. This is the latest signal from a labor market that has remained remarkably resilient in the face of rising interest rates.

While this is good news for workers and for the economy, it also gives the Fed more leeway to keep rates high.

Other sectors of the economy have had much more difficulty, in part because of the higher rates. A report released Wednesday morning suggested manufacturing in the Chicago area is contracting far more than economists feared. It is the latest region to report much weaker-than-expected manufacturing, raising concerns for the broader economy.

On Friday looms the full US government report on economy-wide hiring. Economists expect it to show a slowdown in hiring and an increase in the unemployment rate.

Behind all these concerns boils a drama that is still simmering in Washington about a potential default on US government debt.

President Joe Biden and House Speaker Kevin McCarthy are trying to compete for enough votes to push through a deal they reached over the weekend to allow the US government to borrow more money. They need approval in place before the US government runs out of money to pay its bills, which could happen as early as Monday. If they fail, a default could cause enormous pain to the economy and financial markets.

In overseas stock markets, the Hang Seng fell 1.9% in Hong Kong, while stocks fell 0.6% in Shanghai.

The Nikkei 225 in Japan fell 1.4%, while the indices fell 1.2% in France and 1% in Germany.

In the bond market, the 10-year Treasury yield fell to 3.67% from 3.70% on Tuesday evening. It helps set the rates for mortgages and other large loans that influence the housing market and other markets.

The two-year yield, which moves more in line with Fed action expectations, fell to 4.43% from 4.46%.