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Friday February 3rd, 2023 2:01AM

Stocks drift lower, extending losses into 4th straight week

By The Associated Press
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Stocks closed lower on Wall Street Tuesday, extending the market's losses into a holiday-shortened week.

The S&P 500 fell 0.4% after bouncing between a gain of 0.5% and a loss of 1%. The Dow Jones Industrial Average fell 0.6% and the Nasdaq lost 0.7%.

The major indexes are coming off their third losing week in a row, part of a late-summer slump that erased much of the benchmark S&P 500's gains from July and early August.

Stocks have been losing ground as the Federal Reserve has indicated it will not let up anytime soon on raising interest rates to bring down the highest inflation in decades.

In addition, Wall Street is grappling with worries about a brewing energy crisis in Europe and the implications it could have for the global economy and corporate profits, given that companies in the S&P 500 get half their revenue from abroad, said Michael Antonelli, market strategist at Baird.

"Each day that goes by that we have to talk about an energy crisis or a gas shortage or out of control electrical bills in Europe, the less the market can make constructive headway," he said.

The S&P 500 fell 16.07 points to 3,908.19. The Dow slid 173.14 points to 31,145.30, while the Nasdaq fell 85.96 points to 11,544.91.

Smaller company stocks fell more than the broader market. The Russell 2000 index fell 17.42 points, or 1%, to 1,792.32.

Technology and communications stocks were among the biggest losers. Intel fell 2.8% and Netflix dropped 3.4%.

Bed Bath & Beyond fell 18.4% following the death of its chief financial officer. The company has been suffering from a prolonged sales slump and executive turnover.

The company that wants to take Trump Media public, Digital World Acquisition, plunged 11.4% following reports it didn’t receive enough shareholder support for an extension to close the deal.

ADT rose 16.4% after State Farm said it was taking a 15% stake in the home security company.

Markets in the U.S. were closed on Monday for the Labor Day holiday.

Trading began Tuesday at the New York Stock Exchange after Ukrainian President Volodymyr Zelenskyy virtually rang the opening bell. He gave a pitch for a program to attract large-scale investments to his country as it continues to battle Russian forces.

Markets have been slipping in recent weeks as inflation remains hot and the Federal Reserve stays on track to continue raising interest rates to try and tame stubbornly persistent high prices. The big concern is that the Fed might go too far in raising rates and slam the brakes too hard on an already slowing economy, potentially causing a recession.

Wall Street has been closely watching economic data for clues that inflation might be easing, which traders hope will give the Fed a reason to ease up on rate hikes. The Fed has already raised interest rates four times this year and is expected to raise short-term rates by another 0.75 percentage points at its next meeting later this month, according to CME Group.

“There’s a fairly consensus view now that the Fed is going to be higher for longer and err on the side of inflation reduction over employment and growth,” said Mark Hackett, chief of investment research at Nationwide.

Bond yields rose. The yield on the 10-year Treasury, which influences interest rates on mortgages and other loans, rose to 3.34% from 3.19% late Thursday. The two-year Treasury yield, which tends to track expectations for Fed action, rose to 3.51% from 3.39%.

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