A late burst of selling left stocks far lower on Wall Street on Thursday as the market wrapped up its worst quarter since the pandemic broke out two years ago.
Despite a 3.6% gain in March, a dismal January and February caused US indices to fall for the year to date. The Standard & Poor’s 500 ended the day down 1.6%, bringing its year-to-date loss to 4.9%.
The Dow Jones Industrial Average fell 1.6% while the Nasdaq Composite fell 1.5%. Both indices also posted gains in March, largely due to a market rally in the two weeks leading up to this week.
Oil prices fell as President Biden ordered the release of up to 1 million barrels a day of oil from the country’s strategic oil reserves. The move to pump more oil into the market is part of an effort to control energy prices, which have risen nearly 40% globally this year.
Wall Street’s dodgy end in March comes as investors seek to manage market risks amid rising inflation, geopolitical instability and uncertainty over how aggressively the Federal Reserve will hike interest rates to quell inflation.
“Yesterday’s weakness and some weakness today could be a reaction to sentiment, which is a little more cautious on inflation and earnings given recent strength over the past two weeks and ongoing uncertainty,” said Terry Sandven, chief equity strategist at US Bank Wealth Management.
The S&P 500 fell 72.04 points to 4,530.41. The Dow fell 550.46 points to 34,678.35 and the Nasdaq slipped 221.76 points to 14,220.52.
Smaller company stocks also fell. The Russell 2000 Index fell 20.94 points, or 1%, to 2,070.12.
About 85% of stocks in the benchmark S&P 500 fell. Much of the move seemed like a “consolidation” to investors, said Scott Wren, senior global market strategist at the Wells Fargo Investment Institute.
“It’s a bit of a setback today from the big run we had, but we’re holding up pretty well here,” Wren said. Major indices fell on Wednesday to end a four-day winning streak.
Technology and communications stocks were among the largest weights in the market. Many of the companies in these sectors have expensive stock values that tend to give the broader market a bigger push up or down. Chipmaker Intel fell 3.6%, while Facebook parent Meta Platforms slipped 2.4%.
Banks also fell along with bond yields. A fall in yields forces interest rates on loans to fall, making lending less profitable for banks. The yield on the 10-year government bond slipped to 2.34% from 2.36% late Wednesday. Bank of America fell 4.1%.
US crude prices fell 7%; Brent, the international standard, fell 4.9%. The pullback has slightly dampened oil prices, which have soared amid Russia’s invasion of Ukraine. The conflict has raised fears that tighter supplies will only exacerbate persistently high inflation threatening businesses and consumers around the world.
An inflation gauge closely monitored by the Federal Reserve rose 6.4% year-on-year in February, marking the largest year-on-year increase since January 1982.
Energy prices have been a key factor in raising inflation, and Biden’s plan to release more oil into the system comes as little relief is expected from oil cartel OPEC. The cartel and its allied oil producers, including Russia, are sticking to a modest increase in the amounts of crude oil they pump, a move that supports higher prices.
Higher prices for energy, food and most other things have been a key concern for the world’s central banks, which are raising interest rates to mitigate the impact. Investors have tried to gauge how the economy and businesses will fare given high inflation, higher interest rates, the war in Ukraine and other factors. That got the year off to a rocky start.
Investors received a muted update on the job market on Thursday. More Americans filed for unemployment benefits last week, but layoffs remain at historic lows. Wall Street will get a fuller report on Friday when the Labor Department releases March employment data.