Stock market today: Wall Street is sinking as households become more nervous

NEW YORK (AP) Stocks fell on Wall Street after a report showed sentiment among US consumers is souring. The S&P 500 lost 0.2% on Friday. The Dow barely ended lower and the Nasdaq lost 0.4%. A preliminary survey shows that consumer confidence in the economy is declining. Treasury yields rose as the data also suggested the Federal Reserve should keep interest rates high to undermine rising inflation expectations. That, in turn, hurt Big Tech and other high-growth stocks, which weigh most heavily on Wall Street. There are also still serious concerns about a possible default of the US government debt.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) A seemingly lethargic week on Wall Street ends on a sour note on Friday as US households become more concerned about the economy.

The S&P 500 was down 0.5% and headed for a second consecutive week of losses. The Dow Jones Industrial Average fell 133 points, or 0.4%, to 33,176 with about an hour to trade, while the Nasdaq composite was down 0.7%.

Despite the S&P 500 heading for a sixth straight week of trading less than 1%, there have been major swings amid concerns about a possible recessionhigh inflation and the US government is approaching what could be a catastrophic default on his fault.

Not only Wall Street is concerned. Sentiment among US consumers is falling, according to a preliminary study from the University of Michigan. That’s a concern because strong consumer spending has been one of the pillars that kept an already slowing economy from going into recession.

Joanne Hsu, director of the Surveys of Consumer, pointed to the approaching deadline of June 1, when the US government could run out of money to pay its bills unless Congress allows it to borrow more.

If policymakers fail to resolve the debt ceiling crisis, these gloomy views on the economy will exacerbate the serious economic consequences of default, she said in a statement.

President Joe Biden and congressional leaders postponed a Friday meeting on the debt crisis until next week. The delay was announced as a sign of positive exchanges as staff-level talks are expected to continue throughout the weekend.

One area that was under heavy pressure this week and looking to stabilize was the PacWest Bancorps stock. It has come under heavy scrutiny as Wall Street looks for the next possible US bank to fail after three bankruptcies high-profile collapses since March.

PacWest lost a morning gain to drop 2.3%. A day earlier, it slid sharply after announcing a flight of deposits from the previous week. It’s down about 20% for the week and 80% for the year so far.

Banks have weighed down under the weight of much higher interest rates, which has caused some customers to attract deposits in search of higher yields, while prices for the investments they hold have also fallen.

The rates are so high because the Federal Reserve did she walk with one furious pace to reduce inflation. Reports this week suggested that inflation continues to moderate from last year’s peak, although it remains far too high for the comfort of households and regulators.

The hope on Wall Street is that declining inflation can convince the Fed not to raise rates again at its next meeting in June. That would provide some breathing room for both the economy, which has slowed under the weight of higher interest rates, and the financial markets, where prices have long since begun to fall.

Friday’s consumer confidence report highlighted a possible wildcard. It suggested that US households are anticipating a long-term inflation rate of 3.2%. That’s up from last month’s 3% and the highest level since 2011.

One concern the Fed has is that if expectations for high inflation become entrenched, the behavior of customers and others across the economy could change, exacerbating inflation.

Treasury yields rose in the bond market as a result of the consumer sentiment report. The yield on the 10-year government bond made up for an earlier dip and climbed from 3.39% at the end of Thursday to 3.46%. It helps set rates for mortgages and other important loans.

The two-year interest rate, which moves more in line with the Fed’s expectations, rose from 3.90% to 3.97%.

News Corp. rose 7.3% after it reported a milder decline in earnings and revenue for the last quarter than analysts had expected.

That has been the trend for most of this earnings reporting season. The reports are better than feared, but still weaker than a year earlier. Companies in the S&P 500 are on track to report a second consecutive quarter of earnings-per-share declines, something called an earnings recession.

First Solar rose 25.2% after announcing the purchase of Evolar AB, a European company, to accelerate development of high-efficiency tandem devices and other technologies.

On the losing side of Wall Street was Gen Digital, which fell 6% despite stronger-than-expected earnings and revenue for the last quarter.

Big Tech stocks were also weak. They and other high-growth stocks are seen as some of the hardest hit by high interest rates. Apple fell 1% and Amazon fell 2.1% to act as the two heaviest weights on the S&P 500 after rising in early trading.

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AP Business Writers Yuri Kageyama and Matt Ott contributed.

Stan Choe, The Associated Press