Stocks fall as volatility hits Wall Street; oil drops

NEW YORK (AP) — Stocks fell in morning trading Wednesday as Wall Street undergoes a bout of volatility, driven in part by big swings in technology companies.

The S&P 500 fell 0.8% as of 11:26 a.m. Eastern after falling 1% earlier. Roughly 85% of stocks within the benchmark index fell and it has alternated between gains and losses of more than 1% the past four days.

The Dow Jones Industrial Average fell 332 points, or 1%, to 3,981 and the Nasdaq fell 0.6%.

A measure of small-company stocks that helps gauge confidence in economic growth fell more than the major indexes. The Russell 2000 fell 1.6%.

Technology stocks have swung between gains and losses as investors reassess whether stocks have grown too expensive, particularly high-priced technology companies. Cisco Systems fell 1.9% and Apple fell 0.7%.

The volatility in the market comes as investors try to gauge the economy's path forward amid rising inflation and the ongoing impact from the virus pandemic. Bond yields have remained relatively stable after a sharp jump in late September that signaled concern that high inflation could linger longer than economists and investors had initially anticipated.

The yield on the 10-year Treasury fell to 1.51% from 1.53% late Tuesday. It was as low as 1.32% a little more than two weeks ago. The drop in bond yields weighed on banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America fell 1.1%.

Energy prices are retreating after a strong rally that contributed to inflation fears. U.S. crude oil fell 1.8% and natural gas fell 7.4%. The drop weighed on energy companies. Exxon Mobil fell 2.6%.

International markets also sold off, with exchanges in Japan, South Korea, Germany and France all dropping more than 1%.

Investors will get a closer look at how companies fared in the third quarter when companies release their quarterly financial results in the coming weeks. Wall Street is expecting solid profit growth of 27% for S&P 500 companies, but will also be listening for commentary on how supply chain problems and higher costs are crimping operations.

Companies from a wide range of industries have issued warnings about supply chain problems, shipping delays and higher materials costs. Some companies are growing more concerned that the problem could stretch into the holiday shopping season that typically starts in late November. Toy companies are racing to get their products to retailers as they grapple with a severe supply chain crunch that could mean sparse shelves for the crucial holidays.

Homebuilder Hovnanian slumped 14.5% after warning investors that supply shortages will hurt its finances. Lighting maker Acuity Brands jumped 11.4% after handily beating analysts' fiscal fourth-quarter profit forecasts.

On Friday, the Labor Department will release its anticipated employment report for September. The labor market has been slow to fully recover from the pandemic and the summer surge in COVID-19 cases further impeded its progress.