Stock Market Today: Wall Street is sliding on fears about the downside of an overly strong economy

NEW YORK (`) — Wall Street is sliding Tuesday after the latest signal that the U.S. economy may still be too strong for the Federal Reserve’s liking.

The S&P 500 was down 0.5% in morning trading. The Dow Jones Industrial Average fell 64 points, or 0.2%, as of 10:10 a.m. Eastern time, and the Nasdaq Composite was 0.9% lower.

Financial markets have faltered in recent weeks due to concerns War in the Middle East and its potential impact on oil prices. But those worries have receded somewhat to bring the focus back to what typically drives the stock market’s long-term moves: where interest rates and Corporate profits we are on the way.

A report Tuesday morning raised fears that the Federal Reserve could feel pressure to keep interest rates high. Such a move could help reduce inflation, but at the same time would also reduce the prices of stocks and other investments.

That’s what the report showed Shoppers spent more at U.S. retailers last month than economists expected. While this is a signal of a healthy economy and likely the result of a still-solid labor market, it could also help keep inflation above the Fed’s 2 percent target.

The Fed is trying to create a delicate balancing act of slowing the economy just enough to reduce high inflation, but not so much that it causes a painful recession.

Treasury yields in the bond market rose immediately after the report was released. The yield on the 10-year Treasury note rose to 4.84% from 4.69% late Monday.

A sharp rise in the 10-year yield since the summer has weighed on the stock market as traders increasingly give in to the Fed’s forecasts that it is likely to keep interest rates high for a long time. The central bank has already cut its key interest rate to its highest level since 2001 and is considering whether to raise it again.

High interest rates and yields weigh on the prices of all types of stocks, and they tend to have a particularly strong impact on companies that have long-distance growth expectations or stocks that are considered expensive. That has often put shares of big tech companies in the spotlight, and a 5.4% decline for Nvidia and a 1.6% decline for Apple were two of the biggest weights in the S&P 500.

Nvidia and other chip manufacturers were under additional pressure after the US government expanded restrictions to stop China from the acquisition of advanced computer chips and the equipment to produce them.

Meanwhile, several major U.S. companies posted mixed performances following their latest earnings reports.

Bank of America The stock fluctuated between modest gains and losses, rising 0.1% after beating Wall Street’s third-quarter profit forecasts. It benefited from higher interest rates, but CEO Brian Moynihan also warned that Americans continue to curb spending after depleting savings accumulated during the pandemic.

Johnson & Johnson fell 0.9% after its share price also fluctuated between small gains and losses. According to FactSet, it reported earnings and revenue that fell short of analysts’ expectations.

Lockheed Martin rose 1.8% after reporting higher summer profit than analysts expected.

The general expectation for companies in the S&P 500 index is for summer earnings to grow for the first time in a year.

A big winner in the market was Wyndham Hotels & Resorts, whose shares rose 11.2%. Rival Choice Hotels International said it would buy the company for $90 per share in cash and stock, valuing it at $7.8 billion.

The two had previously discussed a potential deal, Choice CEO Patrick Pacious said, but Wyndham pulled out after they were “in a negotiable price and performance range.”

Election stocks fell 3.8%.

In overseas stock markets, indices were mixed in Europe after rising sharply across Asia.

Crude oil prices remained more stable after fluctuating sharply in recent weeks on fears that the war in the Middle East could lead to supply disruptions if it attracts Iran or other major oil-producing countries.

A barrel of U.S. crude rose 0.3% to $86.92, and Brent crude, the international standard, rose 0.3% to $89.91.

___

` business reporters Matt Ott and Elaine Kurtenbach contributed.