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* August CPI is cooler than expected
* Apple charges S&P the hardest after the product launch event
* Decline in Treasury yields weighs on financial stocks
* Indices down: Dow 0.84%, S&P 500 0.57%, Nasdaq 0.45% (updates with closing prices)
By Stephen Culp
NEW YORK, Sep 14 (Reuters) – Wall Street lost ground Tuesday as economic uncertainties and the increasing likelihood of a corporate tax hike dampened investor sentiment and sparked a wide sell-off despite signs of easing inflation.
Optimism faded throughout the session, reversing an initial rally following the Labor Department’s consumer price index report. All three major US stock indices ended in negative territory as a reminder that September is a historically difficult month for stocks.
So far this month, the S&P 500 is down nearly 1.8%, despite the benchmark index’s up over 18% year-to-date.
“Chances are the market is simply ready to go through an overdue correction,” said Sam Stovall, chief investment strategist at CFRA Research in New York. “From a seasonal perspective, September tends to be the window of opportunity for fund managers.”
The advent of the highly contagious Delta COVID variant has increased bearish sentiment regarding the recovery from the global health crisis, and many now expect a significant correction in equity markets by year-end.
“We’re still in a correction mode that people have been asking for months,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. “Economic data points lacked estimates, and that coincided with the rise in the delta variant.”
The CPI report returned a sub-consensus August reading, a slowdown that confirms claims by Federal Reserve Chairman Jerome Powell that inflation spikes are temporary and allayed market fears that the central bank will come sooner than expected will start tightening monetary policy.
The story goes on
US Treasury bond yields fell on the data pushing financials and investor love returned to growth at the expense of value.
Long-awaited corporate tax hikes to 26.5% from 21% if Democrats prevail are nearing realization as President Joe Biden’s $ 3.5 trillion budget package moves closer to adoption.
The Dow Jones Industrial Average fell 292.06 points, or 0.84%, to 34,577.57 points; the S&P 500 lost 25.68 points, or 0.57%, to 4,443.05; and the Nasdaq Composite fell 67.82 points, or 0.45%, to 15,037.76.
All 11 major sectors of the S&P 500 ended the session in the red, with energy and financials taking the largest percentage drops.
Apple Inc unveiled its iPhone 13 and added new features to its iPad and Apple Watch gadgets at its largest product launch event of the year as the company faces increased court scrutiny for its business practices. Its stocks closed 1.0% and were the strongest resistance for the S&P 500 and Nasdaq.
Intuit Inc gained 1.9% after the TurboTax maker announced it was taking over digital marketing company Mailchimp for $ 12 billion.
CureVac slumped 8.0% after the German biotech company canceled manufacturing contracts for its experimental COVID-19 vaccine.
Declining issues outweighed increasing issues on the NYSE by a ratio of 2.25 to 1; on the Nasdaq favored a ratio of 2.40 to 1 relegated.
The S&P 500 posted two new 52-week highs and two new lows; the Nasdaq Composite posted 50 new highs and 107 new lows.
The volume on the US stock exchanges was 10.07 billion shares, compared with 9.38 billion on average over the last 20 trading days. (Reporting by Stephen Culp; additional reporting by Krystal Hu in New York and Ambar Warrick in Bengaluru; editing by Richard Chang)