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Stock market today: Asian stocks fall after Wall Street falls on interest rate worries

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Asian stocks were mostly lower on Wednesday after Wall Street broke its record-breaking bull run with its worst day in weeks.

Japan's benchmark Nikkei 225 fell 0.8% to 39,511.88 in morning trade. Sydney's S&P/ASX 200 slipped 1.3% to 7,782.50. South Korea's Kospi fell 1.4% to 2,714.18. Hong Kong's Hang Seng lost 1.1% to 16,753.82, while the Shanghai Composite fell 0.2% to 3,070.04.

Analysts said there was growing concern that the fears that rocked Wall Street could spill over into Asia, despite recent relatively positive economic signals from China.

“Investors are grappling with the possibility that this turmoil could mark the start of a deeper correction in markets,” said Stephen Innes, managing partner at SPI Asset Management.

China has set an ambitious economic growth target of around 5% this year as it seeks to overcome recent problems in the real estate sector and the lingering impact of pandemic-era disruptions.

On Wall Street, the S&P 500 fell 37.96 points, or 0.7%, to 5,205.81, marking its worst day in four weeks. It was the second consecutive decline after the price hit an all-time high at the close last week.

Other indices performed worse. The Dow Jones Industrial Average lost 396.61 points, or 1%, to 39,170.24, also moving further away from its record. The Nasdaq composite fell 156.38, or 1%, to 16,240.45, and small stocks in the Russell 2000 index fell 1.8%.

Health insurance companies led the market lower on concerns about their upcoming profits after the US government announced lower-than-expected Medicare Advantage rates. Humana fell 13.4%. Meanwhile, Tesla fell 4.9% after delivering fewer vehicles than analysts expected at the start of 2024.

Traders have already sharply cut their expectations for how many times the Federal Reserve will cut interest rates this year, halving them from a forecast of six at the start of the year. That would be consistent with the three cuts that Fed officials themselves have indicated.

As the U.S. economy continues to be stronger than expected, investors say the chances that the Fed will make just two interest rate cuts this year are increasing. Gargi Chadhuri, chief investment and portfolio strategist for the Americas at BlackRock, suggests that investors spread their bets across a broad range of assets rather than “trying to time the market – or the Fed.”

In the bond market, the yield on the 10-year Treasury note rose to 4.35% from 4.33% late Monday.

The two-year Treasury yield, which is more closely aligned with expectations for Fed action, fell to 4.69% from 4.71% late Monday.

High interest rates inherently slow the economy by making borrowing more expensive. They also have a negative impact on asset prices by making it more attractive for investors to invest their money in safer alternatives instead. Bitcoin fell 5.4%.

In addition to worrying that interest rates will remain high, critics say the U.S. stock market has simply become too expensive after rising more than 20% in six months. To justify such big moves, companies will likely need to deliver strong earnings growth.

In energy trading, benchmark U.S. crude oil rose 3 cents to $85.18 a barrel. Brent crude, the international standard, rose 10 cents to $89.02 a barrel.

In foreign exchange trading, the US dollar rose to 151.61 Japanese yen from 151.54 yen. The euro was at $1.0775, up from $1.0776.

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` business reporter Stan Choe contributed.

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