Stock market today: Stocks tumble in an ugly day as allure grows to buy a Treasury bill and chill

NEW YORK — Wall Street slumped as stocks fell worldwide on expectations for U.S. interest rates to stay high well into next year. The S&P 500 lost 1.6% Thursday, its worst drop since March. Big Tech stocks tumbled again after the Federal Reserve indicated Wednesday it may cut rates next year by only half what it earlier predicted. The Nasdaq composite fell 1.8% and the Dow lost 370 points. The 10-year Treasury yield rose to 4.48% and is near its highest level since 2007.

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. One report showed 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.

Manufacturing and the housing industry have felt the sting of higher interest rates in particular and have struggled more than the broad job market. Wednesday's projections 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.

Cisco Systems also took a hit after it said it would buy Splunk, a cybersecurity company, for roughly $28 billion in cash. Cisco fell 4%, while Splunk jumped 20.9%.

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