June 14, 2024
Stock Market

Wall Street slumps after latest signal of an economic slowdown, as oil tumbles


NEW YORK (AP) — U.S. stocks are slumping Monday following the latest signal showing the U.S. economy is slowing.

The S&P 500 was down 0.2% in afternoon trading, coming off its sixth winning month in the last seven. The Dow Jones Industrial Average was down 236 points, or 0.6%, as of 2:59 p.m. Eastern time, and the Nasdaq composite rose 0.1%.

Treasury yields were also sliding in the bond market after a report showed U.S. manufacturing shrank in May for the 18th time in 19 months, according to the Institute for Supply Management. Manufacturing has been hit particularly hard by high interest rates meant to get high inflation under control.

“Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions,” said Timothy Fiore, chair of the Institute for Supply Management’s manufacturing business survey committee.

Stocks of oil-and-gas producers were leading the market lower after the price of crude tumbled. A slowing economy would mean less growth in demand for fuel, and the price for a barrel of U.S. crude dropped 3.6%. Brent crude, the international standard, also fell 3.4% despite moves over the weekend by Saudi Arabia and other oil-producing countries meant to prop up its price.

Halliburton tumbled 5.3%, and Exxon Mobil sank 2.4%. They helped overshadow some big moves by some familiar stars on Wall Street.

Nvidia climbed another 3.4% to bring its gain for this year to 129% after unveiling new products and services over the weekend. It’s so far been delivering blowout profits to keep at bay criticism that investors have become overzealous about the prospects for AI. Nvidia was by far the strongest force pushing the S&P 500 upward.

The jump was even bigger in another corner of Wall Street well accustomed to stomach-churning swings, both up and down.

GameStop soared 33.8% in a move reminiscent of its early 2021 rocket ride that shook Wall Street and brought the term “meme stock” into the parlance of our times. GameStop jumped after a Reddit account associated with a central character in the 2021 episode said it had built a stake of 5 million shares, along with options to buy more. The post from Sunday night said the position was worth $181.4 million.

It made tidal waves online because it was the same Reddit account that showed similar screenshots of big GameStop holdings in 2021 that helped the struggling video-game retailer’s stock price rocket higher, way beyond what many critics on Wall Street called rational.

“Meme stock” has become the way to describe companies whose prices move more on the enthusiasm of smaller-pocketed investors than on any fundamental change in their business prospects. Other meme stocks also rose Monday, including a 13.7% climb for AMC Entertainment.

In a more traditional move for the market, Stericycle jumped 14.8% after Waste Management said it would buy the medical-waste company for $5.8 billion in cash and assume $1.4 billion of its net debt. Waste Management fell 4.9%.

Hertz Global sank 4.5% after it said its chief operating officer is leaving and named a new chief financial officer.

In the bond market, the yield on the 10-year Treasury fell to 4.40% from 4.50% late Friday. The two-year yield, which more closely tracks expectations for action by the Federal Reserve, fell to 4.82% from 4.88%.

The hope among investors is for the U.S. economy to hit a precise bull’s eye where it slows enough to keep pressure off inflation but not so much that it causes a recession. That in turn could allow the Federal Reserve to cut its main interest rate.

The Fed has been keeping the federal funds rate at the highest level in two decades, which intentionally slows the economy and hurts investment prices, in hopes of getting high inflation fully under control.

This upcoming week has several high-profile economic reports that could send yields on sharper swings.

On Tuesday, the U.S. government will show how many job openings employers were advertising at the end of April. And on Friday, it will give the latest monthly update on overall growth for jobs and workers’ wages.

In stock markets abroad, India’s Sensex soared 3.4% after after the country’s 6-week-long national election came to an end with most exit polls projecting that Prime Minister Narendra Modi will extend his decade in power with a third consecutive term.

Stocks in Mexico, meanwhile, slumped 5.7% after Claudia Sheinbaum claimed victory in that country’s presidential election.

Elsewhere in the world, stock indexes were higher across much of Europe and Asia, though Shanghai and London were exceptions.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.



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