That “dragged equities lower as sentiment soured for risky assets,” Anderson Alves of ActivTrades, said in a commentary.
Investors are awaiting comments later in the day by Federal Reserve Chair Jerome Powell and other top central bankers, he said.
Tokyo’s Nikkei 225 index
NIK,
-0.91%
lost 1.5% to 26,793.32 while the Kospi
180721,
-1.82%
in Seoul fell 1.5% to 2,384.69. The Hang Seng
HSI,
-2.36%
in Hong Kong declined 1.8% to 22,008. The Shanghai Composite index
SHCOMP,
-1.43%
sank 0.8% to 3,383.05.
Australia’s S&P/ASX 200
XJO,
-0.94%
gave up 0.6% to 6,716.70. Bangkok and India also declined.
On Tuesday, the S&P 500
SPX,
-2.01%
ended 2% lower at 3,821.55, while the Dow
DJIA,
-1.56%
dropped 1.6% to 30,946.99. The tech-heavy Nasdaq
COMP,
-2.98%
slid 3% to 11,181.54.
The Russell 2000
RUT,
-1.86%
gave up 1.9% to 1,738.84. The indexes are all on pace to for losses of 6% or more in June.
Roughly 85% of the stocks in the benchmark S&P 500 closed in the red. Technology, communications and health care stocks accounted for a big share of the decline.
Retailers and other companies that rely on direct consumer spending also helped pull the index lower. Energy stocks, the only sector in the index to notch gains this year, rose as crude oil prices headed higher.
The Conference Board reported that its consumer confidence index fell in June to its lowest level in more than a year, results that were much weaker than economists expected.
Investors face a pervasive list of concerns centering around rising inflation squeezing businesses and consumers. Supply chain problems that have been at the root of rising inflation were made worse over the last several months by increased restrictions in China related to COVID-19.
Businesses have been raising prices on everything from food to clothing. Russia’s invasion of Ukraine in February put even more pressure on consumers by raising energy prices and pumping gasoline prices to record highs.
Consumers were already shifting spending from goods to services as the economy recovered from the pandemic’s impact, but the intensified pressure from inflation has prompted a sharper shift away from discretionary items like electronics to necessities.
Central banks are raising rates to try and temper inflation after years of holding rates down to help economic growth but investors fear they could go too far and actually push economies into a recession.
Investors are awaiting remarks expected for midweek by central bank leaders including Fed Chair Jerome Powell and European Central Bank chief Christine Lagarde. They will also get another update on U.S. economic growth on Wednesday when the Commerce Department releases a report on first-quarter gross domestic product.
Wall Street is also preparing for the latest round of corporate earnings in the next few weeks, which will help paint a clearer picture of how companies are dealing with the squeeze from rising costs and consumers curtailing some spending.
Athletic footwear and apparel giant Nike
NKE,
-6.99%
fell 7% after giving investors a cautious update on the potential hit to revenue because of lockdowns in China. The company relies on China for roughly 17% of its revenue, according to FactSet.
Wynn Resorts
WYNN,
+3.15%
rose 3.2% and Las Vegas Sands
LVS,
+4.04%
added 4%. The companies, which have major gambling businesses in China, got a boost after China eased a quarantine requirement for people arriving from abroad.
Technology and communications companies were among the biggest losers Tuesday. Microsoft
MSFT,
-3.17%
fell 3.2% and Apple
AAPL,
-2.98%
dropped 3%. Google parent Alphabet
GOOGL,
-3.30%
slid 3.3%.
Energy stocks made solid gains as U.S. crude oil prices rose 2%.
In other trading Wednesday:
The yield on the 10-year Treasury note
TMUBMUSD10Y,
3.157%,
which helps set mortgage rates, slipped to 3.12% from 3.19%.
U.S. benchmark crude oil
CL00,
-0.51%
slipped 34 cents to $111.42 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude
BRN00,
-0.65%
lost 61 cents to $113.19 per barrel.
The dollar fell to 136.03 Japanese yen
USDJPY,
-0.02%
from 136.12 yen late Tuesday. The euro
EURUSD,
-0.10%
weakened to $1.0506 from $1.0522.
