Wall Street racked up more losses Wednesday as the stock market pulled back for the third-straight day. The broad sell-off went beyond stocks, with the price of Bitcoin and other cryptocurrencies falling sharply.
The S&P 500 index dropped 0.3% after recovering from a 1.6% slide earlier in the day. The benchmark index is on track for its second weekly loss in a row.
The S&P 500 lost 12.15 points to 4,115.68. The Dow Jones Industrial Average fell 164.62 points, or 0.5%, to 33,896.04. The blue-chip index had been down 586 points. The Nasdaq fared better than the rest of the market, shedding only 3.90 points, or less than 0.1%, to 13,299.74.
Smaller company stocks also lost ground. The Russell 2000 index gave up 17.24 points, or 0.8%, to 2,193.64.
Bank stocks were among the biggest decliners. Goldman Sachs fell 1.7% and Wells Fargo lost 1.5%. A range of retailers and other companies that rely directly on consumer spending also pulled the market lower. Home Depot slid 0.7%, Gap fell 3% and L Brands dropped 3.1%.
Energy sector stocks, the biggest gainers so far this year, bore the heaviest losses as the price of U.S. crude oil skidded 3.5%.
Digital currencies fell sharply after China’s banking association issued a warning over the risks associated with digital currencies. A statement posted on the industry association’s website said all members should “resolutely refrain from conducting or participating in any business activities related to virtual currencies.”
“Stocks and cryptocurrencies have been showing signs of froth over the past few months and were due for a pullback,” said Richard Saperstein, chief investment officer of Treasury Partners.
Bitcoin’s price was down 10.8% to $38,723, well below its all-time high of over $64,800 reached a month ago, according to the cryptocurrency news site Coindesk. It swung in a huge range of as low as $30,202 and as high as $43,621 over the course of the day.
That the headline out of China rattled cryptocurrency investors suggests the market was already weak, said Willie Delwiche, investment strategist at All Star Charts.
“If Bitcoin had been holding up better, a headline like that would be dismissed more readily, but it comes at a time when Bitcoin was already well off its highs,” he said.
The Bitcoin skid comes after longtime Bitcoin advocate Tesla said recently that it would no longer accept Bitcoin as payment for its cars, reversing its earlier position.
The selling was so intense that the website of Coinbase, an online brokerage for digital currencies, was temporarily down in the morning. Coinbase’s stock dropped 5.9%, ending about 34% below the peak it reached on April 16, just two days after its initial public offering.
Investors continue to be focused on whether rising inflation will be temporary or whether it will endure. Prices are rising for everything from gasoline to food as the economy recovers from its more than year-long malaise.
The fear is that the Federal Reserve will have to dial back its extensive support if inflation persists. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy.
The minutes from the central bank’s April meeting of policymakers, which were released Wednesday afternoon, reaffirmed the view that the Fed’s decision to keep its benchmark interest rate ultralow remains the best policy approach, though some officials cautioned that some factors pushing inflation higher may not be resolved quickly.
Treasury yields mostly rose. The yield on the 10-year Treasury note rose to 1.67% from 1.64% late Tuesday.
A banner for Squarespace hangs at the New York Stock Exchange, Wednesday, May 19, 2021. The New York-based website-creation platform begins trading with a direct listing at the exchange Wednesday. (AP Photo/Mark Lennihan)