All told, the S&P 500 fell 3.38 points to 6,734.11. The Dow Jones Industrial Average dropped 309.74 to 47,147.48, and the Nasdaq composite rose 30.23 to 22,900.59.
One way companies can tamp down criticism about too-high stock prices is to deliver solid growth in profits. That’s raising the stakes for Nvidia’s profit report coming Wednesday, when it will say how much it earned during the summer.
If it falls short of analysts’ expectations, more drops could be on the way. That would have a big effect on the market because Nvidia has grown to become Wall Street’s largest stock by value. That gives Nvidia’s stock movements a bigger effect on the S&P 500 than any other’s, and it can almost single-handedly steer the index’s direction on any given day.
Another way for stock prices broadly to look less expensive is if interest rates fall. That’s because bonds paying less in interest can make investors willing to pay higher prices for stocks and other kinds of investments.
Treasury yields had been falling for most of this year on expectations that the Federal Reserve would cut its main interest rate several times. And the Fed has indeed cut twice already in hopes of shoring up the slowing job market.
But questions are rising about whether a third cut will actually come after the Fed’s next meeting in December, something that traders had earlier seen as very likely. The downside of lower interest rates is that they can make inflation worse, and inflation has stubbornly remained above the Fed’s 2 per cent target.
Loading
Fed officials have pointed to the US government’s shutdown, which delayed the release of updates on the job market and other signals about the economy. With less information and less certainty about how things are going, some Fed officials have suggested it may be better just to wait in December to get more clarity.
In the bond market, the yield on the 10-year Treasury rose to 4.14 per cent from 4.11 per cent late Thursday.
Bitcoin is one of the investments that can get a boost from lower interest rates. It fell below $US95,000, back to where it was in May. It had been near $US125,000 only in October.
The price of gold, meanwhile, sank 2.4 per cent. It shot to records throughout the year as investors looked for something that could protect from high inflation and big debt loads built by the US and other governments worldwide. But interest rates staying higher can hurt gold, which pays its investors nothing in interest or dividends.
In stock markets abroad, indexes dropped across Europe and Asia. South Korea’s Kospi fell 3.8 per cent for one of the world’s largest losses.
London’s FTSE 100 sank 1.1 per cent amid speculation the U.K. government may ditch plans to raise income taxes, which would have helped chip away at its debt.
AP
The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.
