NEW YORK — Wall Street fell again on Wednesday as stocks fell globally on concerns about the economy.
The S&P 500 fell 0.7% after House Speaker Kevin McCarthy said the gap between Republicans and Democrats remained “far” in efforts to prevent the U.S. government from a potentially disastrous debt default. . Major U.S. stock indexes are having their worst week in more than two months.
The Dow Jones Industrial Average fell 255 points, or 0.8%, while the Nasdaq Composite Index fell 0.6%.
Other markets around the world fell further. Stock indices fell 1.7% in London, 1.9% in Frankfurt and 1.6% in Hong Kong.
Inflation in the UK is still worse than expected, raising fears that the Bank of England will continue to raise interest rates to weigh on the economy. Business confidence in Germany, Europe’s largest economy, fell. Concerns remain that China’s recovery from COVID-19 restrictions may be weaker than expected amid heightened tensions with the United States over technology and security.
The U.S. government could run out of cash to pay its bills as early as June 1 unless Congress authorizes more borrowing.
So far, fears have centered on the bond market, with Treasury bills declining in price around a possible default date. Yields rise when bond prices fall.
The 10-year Treasury yield rose to 3.73% from 3.70% late Tuesday. Yields on two-year bonds climbed to 4.37% from 4.33%.
Still, anxiety among Wall Street stock investors rose 8% to near the highest level since March. That’s when concerns about the banking system flared up under the weight of much higher interest rates.
The Fed has raised interest rates at the fastest pace in decades in hopes of keeping high inflation in check. Rising interest rates adversely affect the prices of stocks, bonds and other investments. As a result, many investors are bracing for a recession.
Federal Reserve officials were divided earlier this month on whether to pause rate hikes at their next meeting in June, according to the latest meeting minutes.
On Wednesday, companies that started the year with better-than-expected earnings helped cap losses on Wall Street.
Kohl’s jumped 7.5% after reporting unexpected earnings in the latest quarter, helped by momentum at Sephora’s beauty shop. Analysts had expected a loss.
Home builder Toll Brothers posted a strong earnings report in its latest quarter, up 2.1%, well above analyst expectations.
Overall, the S&P 500 fell 30.34 to 4,115.24. The Dow fell $255.59 to $32,799.92 and the Nasdaq fell $76.08 to $12,484.16.