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Stock market today: Wall Street pulls back from its records

American flags fly on the front of the New York Stock Exchange near the intersection of Broad and Wall Streets on Wednesday, May 22, 2024, in New York. Markets on Wall Street were mixed early Wednesday but remain at or above record levels as more results from retailers take center stage amid a dearth of economic news. (AP Photo/Peter Morgan)

NEW YORK (AP) — U.S. stock indexes pulled back from their records as concerns about high interest rates weighed on the market. The S&P 500 fell 0.3% and the Nasdaq composite slipped 0.2% Wednesday, a day after both set all-time highs. The Dow Jones Industrial Average lost 0.5%. Indexes had been close to flat early in the day, but they sank after minutes from the Federal Reserve’s latest meeting showed officials suggesting it would likely take longer than previously thought to get inflation fully under control. Target tumbled to one of the market’s worst losses after the retailer reported profit that fell short of analysts’ expectations.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stock indexes are pulling back from their records Wednesday as concerns about high interest rates add pressure on the market.

The S&P 500 was down 0.4% in afternoon trading, a day after setting its latest all-time high. The Dow Jones Industrial Average was down 213 points, or 0.5%, as of 2:20 p.m. Eastern time, and the Nasdaq composite was 0.4% lower after setting its latest record.

Indexes had been close to flat earlier in the day, but they slunk lower after the Federal Reserve released the minutes of its last policy meeting. Discouragingly for markets, the minutes showed Fed officials suggested it “would likely take longer than previously thought” to get inflation fully under control following several discouraging reports at the start of the year.

And even though Fed Chair Jerome Powell said after that meeting that the Federal Reserve is more likely to cut rates than to hike them, the minutes said “various participants” were willing to raise rates if inflation worsens.

One of the market's worst losses came from Target, which tumbled 8% after the retailer reported profit for the latest quarter that fell short of analysts’ expectations. It also gave forecasted ranges for upcoming profit where the midpoints fell below analysts’ estimates, as it said customers are holding back on purchases of non-essentials. Earlier this week, Target said it was cutting prices on thousands of everyday basics to entice customers struggling with still-high inflation.

Lululemon Athletica sank 7.1% after it said its chief product officer, Sun Choe, is leaving the company this month to “pursue another opportunity.” The company announced a new organizational structure where it won’t replace the role of chief product officer.

They helped to counter a 23.7% leap for Petco Health & Wellness, which reported results and revenue for the latest quarter that were better than analysts feared.

TJX, the off-price retailer of apparel and home goods, rose 4.1% after topping profit expectations. The company behind TJ Maxx and Marshalls also raised its forecast for earnings per share over the full year, saying its prices are helping to attract customers.

The day’s headline profit report will come after trading closes for the day. That’s when analysts expect Nvidia to deliver its latest blockbuster quarter of growth thanks to surging demand for chips used in artificial-intelligence technology.

Nvidia’s stock has grown into the third largest on Wall Street, making it one of the most influential stocks in the market. It will need to keep delivering in order to keep the stock market's frenzy around AI going.

In the bond market, the yield on the 10-year Treasury rose to 4.42% from 4.41% late Tuesday. The two-year yield, which moves more closely with expectations for the Fed, rose a bit more. It climbed to 4.87% from 4.84%.

Helping to keep the move in yields in check was that the harsh talk in the minutes from the Fed's latest meeting came before the release of several reports that recently showed softening in inflation and parts of the U.S economy. Those reports in turn have rekindled hopes that the Fed will be able to cut its main interest rate at least once this year.

Fed officials have said in recent speeches that such reports have been encouraging, but they still largely need to see months more of improving data before they could cut the federal funds rate from its highest level in more than 20 years. The Fed is trying to pull off a tightrope walk where it slows the economy just enough through high interest rates to get inflation under control but not so much that it causes a bad recession.

High rates have made everything from credit-card bills to auto-loan payments more expensive. Mortgage rates are also high, and a report on Wednesday showed sales of previously occupied homes were weaker last month than economists expected.

Central banks around the world seem eager to cut interest rates, but “they may not go far” given how well economies are doing and how high inflation still is, according to Athanasios Vamvakidis, a strategist at Bank of America. He said in a BofA Global Research report that he expects only shallow cuts to interest rates, which may also come later than financial markets seem to be forecasting.

In stock markets abroad, indexes were modestly lower across much of Europe and Asia.

London’s FTSE 100 sank 0.5% after the U.K. Office for National Statistics announced a stronger-than-expected inflation reading that hurt hopes for a rate cut in June. Tokyo’s Nikkei 225 fell 0.8% after Japan reported its trade deficit rose last month.


AP Writers Matt Ott and Zimo Zhong contributed.

Stan Choe, The Associated Press

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