Stocks Slump Worldwide on Interest     09/21 09:35

   Wall Street is falling again Thursday as stock prices slump worldwide on 
expectations that U.S. interest rates will stay high well into next year.

   NEW YORK (AP) -- Wall Street is falling again Thursday as stock prices slump 
worldwide on expectations that U.S. interest rates will stay high well into 
next year.

   The S&P 500 was 0.9% lower in morning trading. That follows a 0.9% drop from 
Wednesday after the Federal Reserve indicated it may cut interest rates next 
year by only half of what it had earlier predicted. The Fed has already hiked 
its main interest rate to the highest level since 2001, which helps slow 
inflation but at the cost of hurting investment prices.

   Big Tech stocks again took the brunt of the pain because they're seen as 
some of the biggest victims of high rates. The Nasdaq composite was 1.3% lower, 
as of 10:15 a.m. Eastern time, as Amazon fell 3.2% and Nvidia dropped 1.9%. The 
Dow Jones Industrial Average was down 121 points, or 0.4%.

   Stock prices tend to fall when rates rise because stocks are historically 
risky investments. Why stomach the chance of their big swings when Treasurys 
are paying more in interest than before? And they're paying much more.

   A 10-year Treasury yield is offering a yield of 4.46%, up from 4.40% late 
Wednesday and from 0.50% three years ago. It's near its highest level since 
2007.

   The two-year Treasury yield, meanwhile, was wavering following mixed reports 
on the economy. It slipped to 5.11% from 5.17% late Wednesday after climbing 
earlier in the morning.

   One report showed that fewer U.S. workers applied for unemployment benefits 
last week than expected. It was the lowest number since January and the latest 
signal of a remarkably resilient job market.

   Such a solid labor market helps calm worries about a possible recession. But 
it may also give U.S. households fuel to keep spending, which could encourage 
companies to try to raise prices further and keep upward pressure on inflation.

   A separate report, meanwhile, suggested manufacturing in the mid-Atlantic 
region is contracting by much more than economists expected. Manufacturing, 
along with the housing market, have felt the sting of higher interest rates in 
particular and have struggled more than the broad job market.

   A third report showed sales of previously occupied U.S. homes were weaker 
last month than economists expected.

   Rates may stay high if the Federal Reserve follows through on the latest 
forecasts from its policy-making officials.

   The typical policy maker now sees the federal funds rate rising one more 
time this year, and then dropping by only half a percentage point from there 
through 2024. Three months ago, Fed officials were indicating a full percentage 
point of cuts could be the most likely path.

   That may be an indication that "raises the bar for rate cuts next year," 
according to Goldman Sachs economist David Mericle. He pushed out his forecast 
for the first cut in interest rates to the final three months of 2024, after 
earlier thinking it could happen during the spring.

   He sees the Fed on a path where it can "simply wait until something goes 
wrong and then deliver either small cuts in response to a smaller growth 
threat, similar to the insurance cuts of 2019, or substantial cuts in response 
to a full recession," he wrote in a report.

   High rates slow the economy and raise the pressure across the financial 
industry. Earlier this spring, they helped lead to three high-profile collapses 
of U.S. banks. They also hurt prices for all kinds of investments, but they 
often hit hardest on those bid up on hopes for big growth far out in the 
future. That's why tech stocks often swing in particular with expectations for 
rates.

   Cisco Systems also took a hit after it said it would buy Splunk, a 
cybersecurity company, for roughly $28 billion in cash. Cisco fell 3.9%, while 
Splunk jumped 21.3%.

   On the winning side of Wall Street, FedEx rose 5.4% after it reported 
stronger profit for the latest quarter than analysts expected.

   London's FTSE 100 slipped 0.2% after the Bank of England left interest rates 
steady. The expectation had been for another rate hike, but a surprising report 
this week showed a drop in U.K. inflation.

   Stock markets elsewhere around the world were much weaker.

   Japan's Nikkei 225 fell 1.4%, South Korea's Kospi dropped 1.7% and France's 
CAC 40 lost 1.4%.

   New Zealand's benchmark index fell less than 0.1% as figures released 
Thursday by Statistics New Zealand indicated the economy expanded at a 3.2% 
annual pace in the April-June quarter. Finance Minister Grant Robertson said 
the economy was turning a corner and growing at twice the rate predicted by 
economists.