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February 4, 2023
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Stocks close lower on Wall Street; Southwest losses mount

Stocks close lower on Wall Street; Southwest losses mount

BANGKOK — A broad slide for stocks added to Wall Street’s recent losses Wednesday, as investors count down to the end of the worst year for the S&P 500 since 2008.

The S&P 500 fell 1.2%, with technology, energy and industrial stocks among the biggest weights on the benchmark index. The tech-heavy Nasdaq composite slid 1.4%. Both indexes came into this week with three straight weekly losses.

The Dow Jones Industrial Average dropped 1.1%, while the fell Russell 2000 index of smaller company stocks fell 1.6%.

With two more days of trading left in 2022, the S&P 500 is headed for a roughly 20% drop for the year, even as profits and margins for companies in the index have hit record heights this year. The Dow is on pace for a 9.5% drop, while the Nasdaq is doing much worse, on pace to plunge 34.7%.

The latest losses don’t bode well for investors hoping for another “Santa Claus” rally. That’s Wall Street’s term for when stocks rise in the last five trading days of December and first two of January.

“The proverbial ‘Santa Claus’ rally, which since 1950 has statistically returned approximately 1.3-1.8% nearly 80% of the time, has looked as though Santa has taken an early vacation,” said Quincy Krosby, chief global strategist for LPL Financial.

Investors are in the middle of a mostly quiet and holiday-shortened week. Markets were closed on Monday for the observed Christmas holiday and there are no major economic reports expected this week.

A report from the National Association of Realtors showed that the housing market continued cooling amid high prices and steeper interest. Pending home sales fell 4% in November.

The report weighed down homebuilders. Toll Brothers fell 2.4%.

U.S. crude oil prices settled 0.7% lower and natural gas prices plunged 10.8%. That hurt energy stocks. Exxon Mobil fell 1.6%.

Southwest Airlines slid 5.2% as the carrier grappled with the fallout after cancelling thousands of flight cancellations. The airline’s CEO said it could be next week before the flight schedule returns to normal. Shares in other airlines also fell. Delta Air Lines dropped 2.8% and United Airlines fell 2.4%.

Tesla rose 3.3% as it stabilized from steep losses it suffered after reports Tuesday that it temporarily suspended production at a factory in Shanghai.

The Chinese government announced late Tuesday that it will start issuing new passports, a major step away from anti-virus travel barriers that likely will bring a flood of tourists out of China for next month’s Lunar New Year holiday. China has already said it will drop most of its COVID-19 travel restrictions next month.

Hong Kong’s Hang Seng climbed 1.6%, while the Shanghai Composite index dropped 0.3%.

Markets in Europe closed mostly lower.

In the U.S., the S&P 500 fell 46.03 points to 3,783.22. The Dow dropped 365.85 points to close at 32,875.71. The Nasdaq slid 139.94 points to 10,213.29. The Russell 2000 gave up 27.49 points to finish at 1,722.02.

Bond yields were mixed. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.88% from 3.85% Tuesday. The yield on the two-year Treasury fell to 4.34% from 4.38% late Tuesday.

Wall Street remains on edge and will likely continue dealing with volatile trading as the Federal Reserve continues its fight against stubbornly hot inflation. The Fed and other central banks have been raising interest rates to stifle borrowing and slow spending in order to tame inflation. The strategy, though, risks slowing the economy too much and bringing on a recession.

The Fed has already raised its key interest rate seven times this year and is expected to continue raising rates in 2023. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers forecast that the rate will reach a range of 5% to 5.25% by the end of 2023. Their forecast doesn’t call for a rate cut before 2024.

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Elaine Kurtenbach contributed to this report.

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