By DAMIAN J. TROISE and ALEX VEIGA
AP Business Writers
Stocks are closing lower on Wall Street as investors count down to the end of the worst year for the S&P 500 since 2008. Southwest Airlines shares dropped as the carrier’s dramatic trouble with flight cancellations continued. Energy stocks slipped along with falling crude oil and natural gas prices. Tesla recovered some of the steep losses it suffered after reports Tuesday that it temporarily suspended production at a factory in Shanghai. The benchmark S&P 500 fell 1.2% Wednesday. The Dow Jones Industrial Average and the technology heavy Nasdaq composite also lost ground. Treasury yields were mixed.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
Stocks fell broadly on Wall Street in afternoon trading Wednesday as investors count down to the end of the worst year for the S&P 500 since 2008.
The S&P 500 fell 1.1% as of 3:30 p.m. Eastern, with technology, energy and communication services stocks among the biggest weights on the benchmark index. The Dow Jones Industrial Average fell 304 points, or 0.9%, to 32,938 and the Nasdaq slid 1.3%. Small company stocks fell even more, dragging the Russell 2000 index 1.5% lower.
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 4.35% from 4.38% late Tuesday.
The S&P 500 is headed for a roughly 20% drop in 2022, while the Dow is on pace for a 9% drop, even as profits and margins for S&P 500 companies have hit record heights this year. The tech-heavy Nasdaq is doing much worse and is on pace to plunge 34%.
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 2.1%.
U.S. crude oil prices settled 0.7% lower and natural gas prices plunged 10.8%. That hurt energy stocks. Exxon Mobil fell 1.9%.
Southwest Airlines slid 4.8% 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 was off 2.6% and United Airlines fell 2.3%.
Tesla rose 1.8% 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.
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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