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US Stocks End Lower After Volatile Day 01/25 16:01

   Another volatile bout of trading on Wall Street ended with a broad pullback 
for stocks Tuesday, as investors grapple with economic red flags and 
uncertainty over how aggressive the Federal Reserve will be in fighting rising 
inflation.

   (AP) -- Another volatile bout of trading on Wall Street ended with a broad 
pullback for stocks Tuesday, as investors grapple with economic red flags and 
uncertainty over how aggressive the Federal Reserve will be in fighting rising 
inflation.

   Stock indexes fell sharply to start the day, then came well off their lows 
by late afternoon. Another burst of selling in the final hour of trading pulled 
them lower again. Technology stocks were the biggest drag on the market.

   The S&P 500 fell 1.2% after having been down as much as 2.8%. The benchmark 
index has been falling steadily all month and is now down 9.2% from the 
all-time high it set Jan. 3. The Dow Jones Industrial Average slipped 0.2% and 
the tech-heavy Nasdaq gave up 2.3%.

   Higher inflation has been squeezing businesses and consumers, and the 
Federal Reserve is expected to combat it in 2022 by raising interest rates. 
Investors fear that the Fed could either be moving too late or could be too 
aggressive. The central bank issues its latest policy statement Wednesday.

   The virus pandemic still hovers over the economy and threatens to crimp 
progress with every new wave. The International Monetary Fund cited the omicron 
variant as the reason it has downgraded its forecast for global economic growth 
this year.

   And a potential conflict between Russia and Ukraine threatens to push energy 
prices even higher while forcing more countries to focus on fighting a war 
instead of inflation and COVID-19.

   Wall Street is dealing with signs of slowing economic growth because of 
COVID-19 and a Fed that can't really go back on what it said it would do, said 
Barry Bannister, chief equity strategist at Stifel.

   "The market has come to terms with that and that's a big deal," he said. 
"Fiscal and monetary tightening, together, is tough on financial assets when 
they're coming off of a rip-roaring party from stimulus."

   Still, the fact that the major stock indexes came off their lows of the day 
could be a sign that some investors are betting that a dimmer outlook for 
economic growth may prompt the Fed to take a more measured approach to raising 
interest rates.

   "Weaker economic growth projections have contributed to investors breathing 
a sigh of relief that the Fed won't have to be overly aggressive," said Sam 
Stovall, chief investment strategist at CFRA.

   The S&P 500 fell 53.68 points to 4,356.45. This week, the index has come 
within striking distance of entering a "correction," which among markets 
watchers means a drop of 10% from a peak.

   The Dow fell 66.77 points to 34,297.73. The blue-chip index had been down 
818 points in morning trading.

   The Nasdaq fell 315.83 points to 13,539.29. The index had initially slumped 
3.2%. It entered a correction last week and is now down more than 15% from its 
high set on Nov. 19.

   Small company stocks also lost ground. The Russell 2000 index fell 29.48 
points, or 1.5%, to 2,004.03.

   Major indexes had a similar start to trading on Monday and were down most of 
the day before a late buying spree pushed them to a higher close. That rebound 
may have been just a "head fake," Bannister said, adding that more declines are 
likely in store for the market.

   Even though the S&P 500 managed to eke out a gain after its roller-coaster 
ride on Monday, a measure of nervousness on Wall Street known as the VIX index 
remained high. That suggests stress is continuing to grow in the system, with 
markets in a "high speed spin cycle," strategists at UBS wrote in a report.

   Futures contracts related to the VIX, meanwhile, indicate investors are 
preparing for a high level of volatility in the near term but less in ensuing 
months. That's a flip from their typical behavior last year.

   Technology stocks again led the losses as investors worry about rising 
interest rates. Higher interest rates tend to make shares in high-flying tech 
companies and other expensive growth stocks less attractive. Microsoft fell 
2.7%.

   Retailers and communications companies also fell. Home Depot fell 1.3% and 
Netflix fell 5.4%. U.S. crude oil prices rose 2.7% and helped send energy 
stocks higher. Occidental Petroleum jumped 8.1%.

   American Express surged 8.9% for the biggest gain in the S&P 500 after the 
credit card company reported that its fourth-quarter earnings rose 20% from a 
year earlier.

   Bond yields rose. The yield on the 10-year Treasury rose to 1.78% from 1.74% 
late Monday.

 
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