Wall Street retreats from record closing highs as economic worries mount

NEW YORK - US stocks closed lower on Oct 7 as investors, deprived of economic data resulting from the shuttered government, looked to secondary indicators and remarks from US Federal Reserve officials for clues regarding economic weakness and monetary policy.

All three indexes ended in negative territory after a consumer expectations survey from the New York Federal Reserve showed deteriorating future expectations and rising inflation projections.

The report garnered increased scrutiny amid a federal data blackout resulting from a partisan congressional impasse that extended the government shutdown to its seventh day.

Investors have had to rely on secondary, independently produced data, along with remarks from monetary policymakers, to gauge the likelihood that the Federal Reserve will implement its second rate cut of the year at this month’s policy meeting.

“The New York Fed report probably gave traders an excuse to take some profits since the S&P had been up for seven days in a row,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

“There is an awful lot of uncertainty the longer the government remains shut down because of the absence of any economic data.”

Economically sensitive sectors, including homebuilding , housing, airlines, and transport underperformed the broader market.

“The market is still very much centered on AI driving everything, and I think some of the bloom is off the rose,” said Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest in Elmhurst, Illinois.

Fed Governor Stephen Miran stated his case for continued rate cuts, stressing the risks of keeping policy too restrictive.

The Dow Jones Industrial Average fell 91.99 points, or 0.20 per cent, to 46,602.98, the S&P 500 lost 25.69 points, or 0.38 per cent, to 6,714.59 and the Nasdaq Composite lost 153.30 points, or 0.67 per cent, to 22,788.36.

Among the 11 major sectors of the S&P 500, consumer discretionary suffered the steepest percentage decline, while consumer staples and utilities were the top gainers.

Tesla shares extended their losses, dropping 4.5 per cent after the electric carmaker unveiled its low-cost Model Y. AMD advanced 3.8 per cent after Jefferies upgraded the stock rating to “buy” and other brokerages hiked their price targets the day after the chipmaker’s supply deal with OpenAI bolstered the tech rally.

Corona beer maker Constellation Brands gained 1 per cent after posting a smaller-than-expected drop in second-quarter sales. IBM rose 1.5 per cent after the company announced a partnership with AI startup Anthropic. US-listed shares of Trilogy Metals soared 207.8 per cent after the White House said it would acquire a 10 per cent stake in the company.

AppLovin surged 7.6 per cent, recouping nearly half of its losses from the prior session, and topped the S&P 500 after brokerages Citi Research and Oppenheimer allayed concerns after a report on a US Securities and Exchange Commission probe into its data collection practices.

Bitcoin-related stocks, including Coinbase, Strategy, Riot Platforms, and MARA Holdings , reversed Monday’s gains as the cryptocurrency backed away from record highs. Declining issues outnumbered advancers by a 1.93-to-1 ratio on the NYSE.

There were 350 new highs and 75 new lows on the NYSE. On the Nasdaq, 1,527 stocks rose and 3,126 fell as declining issues outnumbered advancers by a 2.05-to-1 ratio.

The S&P 500 posted 36 new 52-week highs and eight new lows while the Nasdaq Composite recorded 121 new highs and 70 new lows. Volume on US exchanges was 20.8 billion shares, compared with the 19.44 billion average for the full session over the last 20 trading days. REUTERS