By STAN CHOE AP Business Writer
NEW YORK (AP) — U.S. stocks are pulling back from their record on Wednesday.
The S&P 500 fell 0.5% in early trading, a day after topping its prior all-time high set in August. The Dow Jones Industrial Average was down 460 points, or 0.9%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.7% lower.
Stocks felt pressure as yields climbed in the bond market. The yield on the 10-year Treasury rose to 5.35% from 5.27% late Tuesday, near its highest level since 2002, and higher yields put downward pressure on prices for stocks and other investments. They can also slow the economy by making it more expensive for everyone to borrow money.
Yields rose as oil prices ticked higher in their latest swing amid uncertainty about when the war with Iran will allow the industry to return to normal. The price for a barrel of Brent crude, the international standard, added 1.5% to $102.10. That’s well above its $72 price from before the war began, though it’s not as high as the nearly $110 it was scraping last month.
Also pushing up on bond yields worldwide are worries about how much debt the U.S. and other governments have racked up, and how much more they add to it by the day.
The head of the International Monetary Fund said Wednesday that all kinds of countries must take faster action to cut debt, as well as to counter growing inequality.
“Some very tough political choices stare us in the face,” IMF Managing Director Kristalina Georgieva said in a speech in Singapore ahead of autumn IMF-World Bank meetings to be held in Bangkok next week.
“My message to the world’s economic policymakers next week will be this: we cannot keep delaying necessary policy action — you have the tools, now have the wisdom to use them,” she said.
On Wall Street, Worthington Steel fell 7.4% after the metals processing and manufacturing company reported weaker results for the latest quarter than analysts expected.
The pressure is on companies to continue to deliver big growth in profits. Such strength would help to support stock prices when the other big lever that affects stock prices, interest rates, is pushing downward.
Analysts have high expectations for this upcoming earnings reporting season. They’re forecasting growth in earnings per share of nearly 30%, according to FactSet. If companies fall short of that bar, stock prices could easily fall further from their record heights.
Constellation Brands added 1.4% after the seller of Modelo beer and Robert Mondavi wine reported a stronger profit for the latest quarter than analysts expected. But its gain was restrained after it also gave a forecasted range for profit over its full fiscal year whose midpoint was below what analysts expected.
In stock markets abroad, indexes fell across much of Europe and Asia.
The CAC 40 index in Paris dropped 1.1% as yields on French bonds got back to jumping amid worries about the government’s debt and strained budget. Protests across France have raised pressure on the government to increase spending.
South Korea’s Kospi fell even more, 2%, following a sharp loss for SK Hynix, one of its two dominant stocks.
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AP Business Writers Michelle Chapman and Elaine Kurtenbach contributed to this report.