Stocks Give Up More Ground Tuesday     05/24 16:08

   Stocks on Wall Street gave up more ground Tuesday amid mounting worries that 
persistently high inflation will dim corporate profits.

   NEW YORK (AP) -- Stocks on Wall Street gave up more ground Tuesday amid 
mounting worries that persistently high inflation will dim corporate profits.

   The S&P 500 fell 0.8%, while the Nasdaq dropped 2.3%. The Dow Jones 
Industrial Average eked out a 0.2% gain, thank's primarily to big gains for 
McDonald's and UnitedHealth.

   Big technology and communications companies helped weigh down the broader 
market, though some of the selling eased by late afternoon.

   A stark profit warning from Snapchat's parent company spooked investors into 
dumping the stocks of major social media companies. Snap plummeted 43.1%, its 
biggest single-day drop ever, while Facebook's parent, Meta, slumped 7.6%. 
Google's parent fell 5.1%.

   Technology and communications stocks, with their lofty values, tend to have 
an outsize influence on the market. The sectors have been responsible for much 
of the volatility the market has seen recently as well as the broad decline the 
major indexes have seen since early April as investors worry about the impact 
of rising inflation on businesses and consumers.

   The pullback undercut a broad rally a day earlier, the latest example of how 
volatile trading has been during the market's swoon this year.

   "Just given how much uncertainty there is, people are still having a 
difficult time finding that one or maybe two catalysts that give them enough 
confidence to take on risk assets," said Sameer Samana, senior global market 
strategist at Wells Fargo Investment Institute.

   The S&P 500 fell 32.27 points to 3,941.48. The Dow gained 48.38 points to 
31,928.62, and the Nasdaq slid 270.83 points to 11,264.45.

   Smaller company stocks also fell. The Russell 2000 dropped 27.94 points, or 
1.6%, to 1,764.83.

   The pile of concerns weighing on the market has pushed the benchmark S&P 500 
to the brink of a bear market, which is when an index falls 20% from its most 
recent record high. It is down roughly 18% from its record high set earlier 
this year.

   Inflation has been weighing on a wide range of industries in the form of 
higher raw materials costs and more costly labor. Many businesses have been 
raising prices on everything from food to clothing to offset the impact of 
higher costs, but the pressure has been increasing. Key retailers, including 
Target and Walmart have said that higher costs are squeezing operations. They 
also raised concerns that consumers are tempering spending on a wide range of 
goods.

   "When you think about consumer spending, wages are great but inflation is 
greater," said Barry Bannister, chief equity strategist at Stifel. "Consumers 
are squeezed and that's affecting all of retail."

   Consumers were already getting squeezed by a supply and demand disconnect 
when Russia invaded Ukraine and prompted another jump in energy prices. U.S. 
crude oil is up about 50% this year and that has pushed gasoline prices to 
record highs, with pain at the pump cutting into spending for many. Supply 
chain problems were worsened by China's recent lockdown in several major cities 
as it deals with rising COVID-19 cases.

   Wall Street is also worried about the Federal Reserve's plan to fight 
inflation. The central bank is raising interest rates aggressively from 
historic lows, but investors are concerned that it could go too far in raising 
rates or move too quickly. That could slow down businesses and potentially 
bring on a recession. Fed Chair Jerome Powell has acknowledged that high 
inflation and economic weakness overseas could thwart the central bank's 
efforts to cool the economy and curb inflation without tipping into a recession.

   On Wednesday, investors will get a more detailed glimpse into the Fed's 
decision-making process with the release of minutes from the latest policy 
meeting.

   "Until oil cracks and the Fed pauses, its hard for the market to get any 
upside," Bannister said.

   Retailers and companies that rely on direct consumer spending were among the 
big decliners Tuesday. Amazon slid 3.2% and Target fell 2.6%.

   Bond yields fell. The yield on the 10-year Treasury fell to 2.76% from 2.86% 
late Monday.

   Falling bond yields weighed on banks, which rely on higher yields to charge 
more lucrative interest on loans. Wells Fargo fell 1.2%.

   Homebuilders slumped following a government report showing that sales of 
newly built homes fell far short of economists' forecasts. KB Home fell 2.7%.

   Cruise lines and other travel-ralate companies took some of the heaviest 
losses. Carnival slid 10.3% and Norwegian Cruise Line fell 12%.

   Household goods companies and utilities, which are considered less risky 
than other sectors, made gains. Campbell Soup rose 3.5% and Duke Energy closed 
2% higher.