US stock volatility; Gap and Nordstrom declined with poor results
Tokyo Stocks turned mixed on Wall Street on Wednesday as the market continues an unstable period of trading ahead of the US Thanksgiving holiday
The S&P 500 was up 0.1% as of 1:10 pm ET. The Dow Jones Industrial Average fell 32 points, or 0.1 percent, to 35,780 and the Nasdaq rose 0.2 percent.
Technology stocks pulled back from an early slide and were mixed. This helped stabilize the broader market. Shares of computer maker HP rose 10.7% after reporting strong financial results. Autodesk fell 17.5% after the software design firm warned investors that the pace of its recovery was affected by supply chain problems and pressure from inflation.
The mix of retailers who rely on direct consumer spending has also become volatile. The online crafts market Etsy is up 6.4%. The gap decreased 23% after the apparel chain said supply chain problems hampered its third-quarter earnings and revenue. Shares of supermarket operator Nordstrom plunged 29% after reporting weak third-quarter earnings.
Energy stocks gained as crude oil prices remained relatively stable and natural gas prices rose. Devon Energy stock rose 3.8%.
Bond yields fell. The yield on the 10-year Treasury fell to 1.65% from 1.67% late Tuesday. This has affected the banks that depend on higher yields to charge more profitable interest on loans. And JPMorgan Chase fell 0.8 percent.
Supply chain problems and inflation pressures have been major concerns for a wide range of industries. Several companies have warned that they are having trouble meeting demand and are dealing with rising costs of raw materials. These higher costs are passed on to consumers, who have been paying more for everything from food and other basic items to a wide variety of retail items.
“You have an environment where continued supply chain issues start to erode on people,” said Eric Friedman, chief investment officer at US Bank Wealth Management.
Consumers have so far absorbed the higher costs, but analysts are watching closely to see if there is any eventual dip in spending, especially with the start of the prime holiday shopping season.
The latest update on consumer spending shows a rebound in October with a rise of 1.3%, according to the Commerce Department. That’s just over double the gains in September.
It’s been a short and otherwise quiet week for investors. Markets will be closed Thursday for the Thanksgiving holiday and will close early Friday.
Investors received several upbeat economic updates on Wednesday.
The Commerce Department reported that the US economy slowed to a modest 2.1% annualized rate in the first quarter from October to December, slightly better than its first estimate. But economists expect a strong rebound in the current quarter as long as rising inflation and the recent spike in COVID cases do not hamper activity.
The number of Americans filing for unemployment benefits last week fell to the lowest level in more than half a century, the Labor Department reported, another sign that the US labor market is recovering rapidly from last year’s coronavirus recession.
The Federal Reserve will release minutes later in the day from its October policy meeting, which could give investors more details about the central bank’s plan to begin reducing bond purchases that have helped keep interest rates low.
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