NEW YORK (AP) — Stocks edged higher in afternoon trading Wall Street Tuesday but markets remain shaky as rising interest rates and pressure from inflation spark concerns about economic growth.
The S&P 500 rose 0.3% as of 1:14 p.m. The benchmark index wavered between a loss of 1% and gains of 0.4% throughout the morning. The Dow Jones Industrial Average fell 98 points, or 0.3%, to 33,013 and the Nasdaq also rose 0.3%.
Technology stocks gained ground and did much of the heavy lifting to support the broader market. Apple rose 1%.
Retailers suffered some of the biggest losses following a discouraging update from industry giant Target. The big-box retailer shed 3.7% after saying it’s cancelling orders from suppliers and slashing prices. The move comes as consumers shift spending from clothing and electronics to services like travel and dining out as pandemic fears abate.
Walmart fell 2.1% and Home Depot fell 1.5%.
Bond yields eased following Monday's jump, which was fueled by persistent anxiety over a possible U.S. economic slowdown. The yield on the 10-year Treasury fell to 2.99% from 3.03% late Monday.
Earnings and deal news helped move several stocks. Kohl's soared 8.7% after the department store chain said it's in advanced talks to sell itself for about $8 billion to Vitamin Shoppe owner Franchise Group. Jam maker J.M. Smucker rose 5% after reporting strong earnings.
Markets have been choppy as investors try to determine how much damage rising inflation will inflict on the economy and whether rising interest rates will help or hurt the situation.
Businesses are raising prices on everything from food to clothing to offset inflation's impact on their costs. Those higher prices have squeezed consumers, who are trimming their spending on high-priced items as they spend more on necessities like food.
Russia's ongoing war on Ukraine has raised food and energy prices across the globe. Record-high gasoline prices have put an additional squeeze on consumers. U.S. crude oil prices are up 59% this year. The World Bank has sharply downgraded its outlook for the global economy, pointing to Russia’s war and concerns about the potential return of “stagflation," a toxic mix of high inflation and sluggish growth unseen for more than four decades.
The Federal Reserve has responded by pivoting from a policy of maintaining low interest rates during the pandemic to aggressively raising interest rates to slow economic growth and temper the impact from inflation. The plan has raised concerns that the Fed could go too far too quickly and possibly tip the U.S. economy into a recession.
Worries about the aggressive rate hikes and inflation have weighed on markets. The benchmark S&P 500 index is coming off of its eighth losing week in the last nine. Big daily swings have become the norm for markets as investors review government data and corporate updates on inflation. They will receive another update on Friday when the U.S. releases its latest monthly update on consumer prices.
At the Fed's policy meeting next week Wall Street expects a 0.5 percentage point increase in its benchmark interest rate, double the size of the central bank's usual increase.