Wall Street rebounds from record highs

NEW YORK (AP) — U.S. stocks fell slightly from their records on Wednesday as financial markets around the world paused after major recent moves.

The S&P 500 fell 0.2% a day after hitting a record high for the 41st time this year. The Dow Jones Industrial Average fell 293 points, or 0.7%, after also hitting a record the day before, while the Nasdaq Composite rose less than 0.1%.

Treasury yields rose in the bond market after falling the day before on a surprisingly weak update on U.S. consumer confidence. The worst drop in three years raised concerns about the strength of the U.S. economy but also raised expectations that the Federal Reserve would deliver another dose of larger-than-usual relief with a big cut in interest rates at its next meeting.

The decline may not be as bad as it seems, at least for financial markets. The biggest losses in confidence have been concentrated among lower-income households, which have had to make more purchases on credit cards, said Jack Ablin, Cresset’s chief investment officer. But when it comes to the economy and potential corporate profits, top earners are spending more on non-essentials, and their confidence appears to be holding up better.

Indices on overseas stock markets were more modestly moved after rising the day before on hopes that fresh stimulus measures from China would support the world’s second-largest economy. Chinese indexes rose again on Wednesday but pared their gains as the day progressed, while European indexes fell. Crude oil prices also gave back gains.

On Wall Street, Stitch Fix fell 39.5% after the online fashion styling service said revenue in the current quarter could be 15% to 17% lower than a year earlier. Shares have fallen from $100 at the start of the pandemic to below $3.

KB Home fell 45.4% after reporting a profit for the latest quarter that was just below analysts’ expectations. However, the homebuilder said orders rose in August as mortgage rates fell.

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A separate report released Wednesday morning showed that new home sales across the country fell in August, but not as much as economists had feared.

The next date circled on the calendar for a potentially big market move is next week, when the latest monthly update on the U.S. labor market is due. Slowing hiring in the world’s largest economy has become the biggest concern among investors as inflation has eased significantly from its peak two summers ago.

While layoffs remain relatively low, U.S. employers are also more reluctant to hire. Critics fear the labor market could weaken further as the cumulative effects of the Federal Reserve’s past rate hikes play out.

The Fed kept its key interest rate at a 20-year high for more than a year, hoping to slow the U.S. economy enough to suppress inflation. Last week, it pivoted to protecting the labor market by cutting the federal funds rate by a larger-than-usual half-percentage point. Critics say it may be too late.

A strong labor market should help Cintas, which supplies uniforms, fire extinguishers and other products to businesses. It rose 1.2% after reporting stronger earnings for its latest quarter than analysts had expected. Cintas also raised its forecasts for full-year earnings and revenue.

Trump Media & Technology Group rose 10.5% for its first back-to-back gains in two weeks. The stock struggled amid speculation about whether former President Donald Trump would sell some of his stake in the company behind the Truth Social network now that he is allowed to do so.

Overall, the S&P 500 fell 10.67 points to 5,722.26. The Dow fell 293.47 points to 41,914.75 and the Nasdaq Composite rose 7.68 points to 18,082.21.

In the bond market, the yield on the 10-year Treasury note rose to 3.78% from 3.73% Tuesday night. The yield on the two-year Treasury note, which is more in line with the Fed’s expectations, rose to 3.56% from 3.54%.

Traders are betting on a roughly 60% probability that the Federal Reserve will make another half-percentage-point cut at its next meeting in November, according to data from CME Group. The Fed has traditionally raised rates by only a quarter of a percentage point at a time.

On foreign stock exchanges, indices rose 1.2% in Shanghai, fell 1.3% in South Korea and fell 0.2% in London.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

Stan Choe, Associated Press