U.S. stocks ran out of steam on Wednesday after an early surge, in a sign that investors are still spooked by the market’s recent retreat and wary more fallout is to come.
In an up-and-down session, the benchmark S&P 500 faded at the close after trading higher for much of the afternoon, following two days of big moves, including its largest single-day percentage loss in more than six years on Monday.
“Obviously there’s a lot of concerned and nervous people. You might have had day traders trying to get out at the end of the day. Who knows what tomorrow brings,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
While Wednesday’s trading lacked the wild swings of the prior two sessions, the Dow industrials moved in a roughly 500-point range, more than three times the average daily swing over the past year.
“There are going to be people that are going to be selling into any kind of strength and then you are going to have some value-conscious investors taking advantage of these multiple 100-point drops,” said Alan Lancz, president of Alan B. Lancz & Associates, an investment advisory firm in Toledo, Ohio.
”Now that everybody is on edge, you’re going to see the volatility swing in both directions,” Lancz said.
The Dow Jones Industrial Average fell 19.42 points, or 0.08 percent, to 24,893.35, the S&P 500 lost 13.48 points, or 0.50 percent, to 2,681.66 and the Nasdaq Composite dropped 63.90 points, or 0.9 percent, to 7,051.98.
Technology shares fell 1.4 percent, with Apple down 2.1 percent, while energy dropped 1.7 percent as oil prices slumped. Gains for the industrials .SPLRCI and financials sectors supported the market.
After regular cash trading on Wednesday, S&P e-mini futures fell 1 percent, suggesting the negative tone would continue on Thursday.
The S&P 500 had rebounded 1.7 percent on Tuesday, a day after its biggest drop since August 2011.
Investors were weighing whether the sharp swings were the start of a deeper move down or just clearing the way before a resumption of the aging bull market, which would turn nine on March 9.
The market’s pullback came with concerns about rising bond yields and higher inflation, reinforced by Friday’s January U.S. jobs report that prompted worries the Federal Reserve will raise benchmark interest rates at a faster pace than expected this year.
“Although there are a couple of things in the way of perfect scenarios, that being interest rates and bond yields and what not, people are still looking at equities as a good investment and they still believe that there is going to be continued upside,” said Peter Costa, president of trading firm Empire Executions in New York.
On Wednesday, the U.S. Senate reached a two-year bipartisan budget deal worth around $300 billion in an attempt to end the kind of squabbling over fiscal issues that has plagued Washington for years.
Benchmark Treasury yields rose after the Treasury Department sold new 10-year notes to soft demand and the U.S. Senate reached a budget deal, possibly adding to pressure on stocks.
“The 10-year rate went back up ... so if you start making new territory there, that could start making people very nervous,” Massocca said.
The Cboe Volatility Index, known as the VIX, fell 2.3 points to 27.73, but that was still more than twice levels generally seen in the past few months.
Wynn Resorts climbed 8.6 percent after casino mogul Steve Wynn resigned as the chief executive following sexual misconduct allegations.
Snapchat owner Snap soared 47.6 percent after it reported surging growth in users and revenue in its latest quarter.
About 9.1 billion shares changed hands in U.S. exchanges, compared with the 8 billion daily average over the last 20 sessions.
Advancing issues outnumbered declining ones on the NYSE by a 1.71-to-1 ratio; on Nasdaq, a 1.33-to-1 ratio favored advancers.
The S&P 500 posted three new 52-week highs and three new lows; the Nasdaq Composite recorded 28 new highs and 42 new lows.
© 2023 Thomson/Reuters. All rights reserved.