Stocks waver on Wall Street, hover close to bear market

A trader works on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

A trader works on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

A trader works on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

A trader works on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks are opening moderately lower in early trading on Wall Street, finding some stability a day after their biggest drop in nearly two years. (AP Photo/Seth Wenig)

A trader works on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

Traders work on the floor at the New York Stock Exchange in New York, Thursday, May 19, 2022. Stocks fell in morning trading on Wall Street Thursday, deepening a slump for major indexes as persistently high inflation continues to weigh on the economy. (AP Photo/Seth Wenig)

NEW YORK (AP) — Stocks wavered in afternoon trading on Wall Street Thursday as persistently high inflation continues to weigh on the economy and keeps major indexes mired in a deep slump.

The S&P 500, the benchmark for many index funds, is coming off of its biggest drop in nearly two years. It eased off an early stumble and was down 0.3%. It has fallen roughly 18% from the record high it set early this year. That's just shy of the 20% point that defines a bear market.

The Dow Jones Industrial Average fell 142 points, or 0.5%, to 31,342 as of 3:23 p.m. Eastern and the Nasdaq rose 0.1%.

Rising interest rates, high inflation, the war in Ukraine and a slowdown in China’s economy have caused investors to reconsider the prices they’re willing to pay for a wide range of stocks, from high-flying tech companies to traditional automakers. Investors have been worried that the soaring inflation that’s hurting people shopping for groceries and filling their cars up is also walloping company profits.

Target fell another 4.9% a day after losing a quarter of its value on a surprisingly weak profit report.

Wall Street is also worried about the Federal Reserve's plan to fight the highest inflation in four decades. The Fed is raising interest rates aggressively and investors are concerned that the central bank could cause a recession if it raises rates too high or too quickly.

The 10-year Treasury pulled back to 2.85% from 2.88% late Wednesday, but it has been generally rising as investors prepare for a market with higher interest rates. That has also pushed up mortgage rates, which is contributing to a slowdown in home sales.

The pile of concerns on Wall Street has made for very choppy trading and big swings between gains and losses within any given day.

Technology stocks have been some of the most volatile holdings. The sector includes heavyweights like Apple that have lofty valuations, which tend to push the market more forcefully up or down. The sector has been hit especially hard by the Fed's policy shift to raise interest rates. Low rates help support investments considered more risky, like tech stocks, and higher rates lessen the incentive to take that risk.

Technology stocks fell Thursday, contributing to the choppy market. Cisco Systems slumped 14.3% after the seller of routers and switches cut its profit forecast amid supply chain constraints. Synopsis jumped 11.6% after the software company raised its financial forecasts for the year.

Household goods companies, grocery store operators and food producers fell broadly. General Mills fell 1.7% and Clorox fell 4.8%.

Retailers and other companies that rely on direct consumer spending were mostly higher. Amazon rose 0.8% and Expedia climbed 5.4%. Bath & Body Works slid 5.1% after cutting its profit forecast for the year.

With the S&P 500 little changed, the index remained close to, but in not moving decidedly in the direction of falling into, a bear market. The last bear market happened just two years ago, following the onset of the virus pandemic.

Why use a bear to denote a market slump? Bears hibernate, so they represent a market that’s retreating, said Sam Stovall, chief investment strategist at CFRA. In contrast, Wall Street’s nickname for a surging stock market is a bull market, because bulls charge.

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Veiga reported from Los Angeles.