franckreporter
Wall Street’s major averages ended in the red on Wednesday, weighed down by a fall in shares of Apple (AAPL) and worries over the impact of elevated oil prices on inflation.
An unexpected rise in a key U.S. services activity gauge also sparked concerns that the Federal Reserve would have to keep rates higher for longer.
The Nasdaq Composite (COMP.IND) retreated 1.06% to close at 13,872.47 points, with Apple (AAPL) the second biggest percentage loser on the tech-heavy index. The Wall Street Journal reported that China had told government agencies to stop using the tech giant’s iPhone and other foreign electronic devices at work.
The benchmark S&P 500 (SP500) settled 0.69% lower at 4,465.60 points, while the blue-chip Dow (DJI) slipped 0.57% to finish at 34,444.38 points.
Nine of the 11 S&P sectors ended in negative territory, led by Technology. Utilities and Energy were the two gainers.
“September 6th ended up being a rather painful day for most investors. At one point, most market indexes were down in excess of 1%. As the day drew to an end, the Nasdaq (COMP.IND) was still down more than that. The sad truth is that there is a lot of pessimism to go around at the moment,” Daniel Jones, investing group leader of Crude Value Insights, told Seeking Alpha.
WTI crude oil futures (CL1:COM) hit a 10-month high on Tuesday while brent futures (CO1:COM) rose above a key level at $90/bbl, after major oil producing nations Saudi Arabia and Russia surprised markets with longer-than-expected production cuts till the end of the year. Brent (CO1:COM) was above $90 again on Wednesday, and concerns over elevated oil prices and its impact on inflation remained on investors’ minds.
The economic calendar at home was busy on Wednesday. ISM’s reading of U.S. services activity in August came in at 54.5 versus the consensus figure of 52.5 and 52.7 prior. Meanwhile, the S&P Global U.S. PMI composite slipped slightly more than expected in August.
“In addition to high oil prices weighing on the economy, it also does not bode well from an inflationary perspective since energy is a major component of the inflation measurement,” Daniel Jones said.
“Add on top of this the fact that ISM Services PMI came in strong … and it’s not surprising that the market is concerned. A strong economy, while typically positive, may also result in the Federal Reserve having to push interest rates even higher and/or keeping them elevated for an extended period of time,” Jones added.
Earlier, mortgage applications declined to their lowest level since 1996. Also, the U.S. trade in goods and services deficit widened less than expected in July.
Additionally, the Fed’s Beige Book report on regional economic activity arrived, which indicated that economic growth was modest during July and August.
Turning to the fixed-income markets, Treasury yields fluctuated on Wednesday, after posting gains in the previous session. The longer-end 10-year yield (US10Y) was up 2 basis points to 4.29%, while the more rate-sensitive 2-year yield (US2Y) was up 5 basis points to 5.02%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
Looking at active movers, Roku (ROKU) jumped after announcing job cuts and boosting its third quarter guidance.