Stocks slump on Wall Street after a morning rally evaporates

NEW YORK (AP) — Wall Street slumped after a morning rally evaporated, but the losses weren’t as bad as the manic moves that wracked markets worldwide over the last week. The S&P 500 fell 0.8% Wednesday. The Dow Jones Industrial Average fell 0.6%, and the Nasdaq composite dropped 1%. Stocks swung lower as Nvidia, one of Wall Street’s most influential companies, went from a morning gain to a loss of 5.1%, making it the heaviest weight on the S&P 500. Nvidia and other Big Tech stocks have been struggling on worries their prices shot too high amid Wall Street’s frenzy around artificial-intelligence technology.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — U.S. stocks are subdued Wednesday after a morning rally gave way to modest declines, but Wall Street is still holding relatively steady compared with its manic swings over the last week.

The S&P 500 was 0.4% lower in afternoon trading after an earlier jump of 1.7% evaporated. The Dow Jones Industrial Average was down 179 points, or 0.5%, as of 2:30 p.m. Eastern time, and the Nasdaq composite was 0.6% lower.

Stocks swung lower as Nvidia, one of Wall Street’s most influential companies, went from a morning gain of 4.4% and pushing strongly upward on the S&P 500 to a loss of 3.8% that made it the index's heaviest weight. Nvidia and other Big Tech stocks have been largely struggling the last month on worries their prices shot too high amid Wall Street's frenzy around artificial-intelligence technology.

A profit report from Super Micro Computer, whose stock more than quadrupled in the first two and a half months of the year, helped further mar excitement around AI. Even though its revenue soared 143% in the latest quarter, profit for the company that sells server and storage systems used in AI and other computing fell short of analysts' high expectations. Its stock tumbled 19.4%.

Still, the day's moves for U.S. stock indexes looked like modest ripples compared with the waves that have been crashing through global markets since last week. The S&P 500 is coming off a 1% rally that broke a brutal three-day losing streak where it tumbled a bit more than 6%.

Several reasons were likely behind the slide for markets worldwide, and one of them that’s centered in Japan seems to be calming. The Bank of Japan raised its main interest rate by only a bit last week, but the move nevertheless sent aftershocks worldwide. It scrambled a favorite trade among some hedge funds and other investors, who borrowed money for very cheap in Japanese yen and then invested it elsewhere around the world.

Speaking to business leaders in the northern island of Hokkaido, Shinichi Uchida, deputy governor of the Bank of Japan, acknowledged the recent market turmoil, which was also triggered in part by concerns about the slowing U.S. economy.

Japan’s central bank can afford to wait, he said, and “will not raise its policy interest rate when financial and capital markets are unstable.” He also said he believed the U.S. economy would have a “soft landing” and avoid a recession, even if fears have risen the Federal Reserve has kept interest rates too high for too long in hopes of stifling inflation.

The Japanese promise offered a balm for markets, nervous about additional moves by the Bank of Japan, which only recently ended its yearslong campaign to keep interest rates below zero.

But it also highlights how risks may remain, suggesting there’s still room left for the popular “carry” trade to unwind and that some hedge funds and other investors may “still remain offsides,” according to John Lynch, chief investment officer for Comerica Wealth Management.

Japan’s rate hike last week sent the value of the Japanese yen soaring, and the resulting exit of investments by those hedge funds likely slapped turbochargers onto market losses, including the worst drop for the Nikkei 225 since the Black Monday crash of 1987.

The value of the Japanese yen is one of the first things Darrell Cronk, chief investment officer for Wealth & Investment Management at Wells Fargo, checks now when he wakes each morning because it shows how much the “carry” trade is unwinding.

The other thing Cronk checks is the two-year Treasury yield, which he says shows where the market wants or needs the Federal Reserve to take its main interest rate.

Treasury yields tumbled sharply Monday, when fear in the market was spiking and investors were speculating the Federal Reserve could even have to call an emergency meeting to cut interest rates quickly. But they've steadied since then.

The yield on the two-year Treasury edged up to 4.00% Wednesday from 3.99% late Tuesday.

The expectation on Wall Street is for the Fed to cut its main interest rate at its next scheduled meeting next month by either the traditional quarter of a percentage point or the more severe half of a point.

In the meantime, earnings reports from the biggest U.S. companies continue to roll in, and the growth for those in the S&P 500 index may end up being the best since 2021, according to FactSet.

The Walt Disney Co. delivered stronger earnings for the latest quarter than analysts expected, and its streaming business reported a profit for the first time. But its stock nevertheless fell 3.1% after it warned recent softness it saw at its U.S. theme parks could continue for “the next few quarters.”

Airbnb tumbled 14.4% after its profit in the second quarter fell short of analysts’ expectations, and it told investors that it saw some signs of slowing demand in the U.S.

Helping to limit the market's losses was Apple, which rose 1.2%. It was clawing back losses from earlier in the week after Warren Buffett's Berkshire Hathaway disclosed it had slashed its ownership stake in the iPhone maker.

In stock markets abroad, indexes climbed across much of Europe and Asia.

AP Business Writer Matt Ott contributed.

The monitor of specialist Anthony Matesic is seen through his glasses as he works on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

Trader Drew Cohen, left, and specialist Patrick King work on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

Craig Esposito, foreground left, works with fellow traders on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

Trader James Conti works on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

Specialist John McNierney, right, works with a colleague on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

Specialist Thomas Schreck work at his post on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

Trader Michael Milano. left, works with colleagues on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

Traders work on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

The monitor of specialist Anthony Matesic is seen through his glasses as he works on the floor of the New York Stock Exchange, Wednesday, Aug. 7, 2024. (AP Photo/Richard Drew)

FILE - A man walks past the New York Stock Exchange on Wednesday, Aug. 7, 2024 in New York. (AP Photo/Peter Morgan)

Specialist Patrick King, left, works at his post on the floor of the New York Stock Exchange, Tuesday, Aug. 6, 2024.(AP Photo/Richard Drew)

Trader Drew Cohen works on the floor of the New York Stock Exchange, Tuesday, Aug. 6, 2024.(AP Photo/Richard Drew)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI), top left, and the foreign exchange rate between U.S. dollar and South Korean won, center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, Aug. 7, 2024. (AP Photo/Ahn Young-joon)

Currency traders watch monitors near a screen showing the Korea Composite Stock Price Index (KOSPI) at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, Aug. 7, 2024. (AP Photo/Ahn Young-joon)

Currency traders work near a screen showing the Korea Composite Stock Price Index (KOSPI), top center left, and the foreign exchange rate between U.S. dollar and South Korean won, top center, at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Wednesday, Aug. 7, 2024. (AP Photo/Ahn Young-joon)

MELAMCHI, Nepal (AP) — In between the Himalayas' towering mountains, the town of Melamchi is no stranger to extreme weather, and its landscape bears the scars of years of floods and landslides.

Located just 50 kilometers (31 miles) outside Kathmandu, lush green mountainsides are dotted with landslips and rubble. Amid the debris, people live and work, and children play.

Saroj Lamichane, a 24-year-old resident of the region, says he still remembers “the terrifying sound of the flood.” Lamichane fled that night, returning only to collect belongings wedged between boulders and broken walls.

Many houses in Melamchi are on stilts to avoid the worst of the flooding. Still, floors are covered in a layer of loose rock. Windows have been ripped out of walls. And some buildings still slant after Nepal's devastating 2015 earthquake.

Farms are also not spared.

Sukuram Tamang, 50, lost his land and field to floods in 2021, and his home was damaged in a landslide this year. When The Associated Press visited, Tamang stood holding one of his goats — a literal handful of what survived Melamchi's incessant weather extremes.

“Even the little that remained has been swept away by floods earlier this year,” said Tamang's wife, Maya. “The river used to be a 20-minute walk from our house but during the floods, we were shocked to see it overflow and wash away everything we had.”

Another farmer, Sita Pandit, 50, took a loan to rebuild her home that was destroyed in the earthquake. But one year after construction finished, her new home was swept away by the 2021 floods. Rocks and debris now cover her farm.

In a 2021 report, the Kathmandu headquartered International Centre for Integrated Mountain Development found that cascading hazards are becoming more common in Nepal and the Hindu Kush Himalaya.

Rising temperatures are leading to heavy glacial melt and glacial lakes overflowing. They also lead to shifting rainfall patterns which bring heavy sediments downstream, said Sudan Bikash Maharjan, one of the authors of the 2021 report.

Maharjan said local and federal governments need to be better prepared and give people time to evacuate.

Until then, many work hard to rebuild their old lives. People reconstruct homes among the debris or build new ones entirely. They walk and live among pieces of homes and furniture. Layers of mud cover up the lives they once lived.

Follow Niranjan Shrestha on Instagram.

The Associated Press’ climate and environmental coverage receives financial support from multiple private foundations. AP is solely responsible for all content. Find AP’s standards for working with philanthropies, a list of supporters and funded coverage areas at AP.org.

A girl runs in front of the recent landslide at Gyalthum, Melamchi, northeast of Kathmandu, Nepal, Sunday, Sept. 15, 2024. (AP Photo/Niranjan Shrestha)

Abandoned houses are visible in Chanaute Market, northeast of Kathmandu, Nepal, Sunday, Sept. 15, 2024. (AP Photo/Niranjan Shrestha)

Footprints are visible at Chanaute Market, Melamchi, northeast from Kathmandu, Nepal, Sunday, Sept. 15, 2024, on the sand inside a house damaged by floods in 2021. (AP Photo/Niranjan Shrestha)

A man gazes out from an abandoned house in Chanaute Market, Melamchi, northeast of Kathmandu, Nepal, on Sunday, Sept. 15, 2024, damaged by floods in 2021. (AP Photo/Niranjan Shrestha)

A man walks by abandoned houses in Chanaute Market, Melamchi, northeast of Kathmandu, Nepal, Sunday, Sept. 15, 2024, damaged by floods in 2021. (AP Photo/Niranjan Shrestha)

Saroj Lamichane salvages bricks from the ruins of his house northeast of Kathmandu, Nepal, Saturday, Sept. 14, 2024, that was destroyed by floods in 2021. (AP Photo/Niranjan Shrestha)

The sand-filled entrance of a house is visible in Chanaute Market, Melamchi, northeast of Kathmandu, Nepal, Sunday, Sept. 15, 2024, that was damaged by floods in 2021. (AP Photo/Niranjan Shrestha)

Sukuram Tamang, 50, prepares to cook food inside a temporary shelter on rented land in Melamchi, northeast of Kathmandu, Nepal, on Saturday, Sept. 14, 2024, after he lost his home in a landslide. (AP Photo/Niranjan Shrestha)

Rocks and sand fill an abandoned home in Melamchi, northeast of Kathmandu, Nepal, June 26, 2024, that was damaged by floods in 2021. (AP Photo/Niranjan Shrestha)

A man sets a fish trap near homes abandoned after flooding at Chanaute Market, Melamchi, northeast of Kathmandu, Nepal, on Sunday, Sept. 15, 2024. (AP Photo/Niranjan Shrestha)

Sukuram Tamang, 50, stands with his goat in front of where his house once stood after it was damaged by recent landslides in Melamchi, northeast of Kathmandu, Nepal, on Saturday, Sept. 14, 2024. (AP Photo/Niranjan Shrestha)

A worker uses an excavator to clear land for a road that would connect to the upper villages of Melamchi, northeast of Kathmandu, Nepal, on Sept. 15, 2024. (AP Photo/Niranjan Shrestha)

Laxmi Jyoti, 41, walks near where her home used to be in Chanaute, Melamchi, northeast from Kathmandu, Nepal, Sunday, Sept. 15, 2024, now covered with large rocks brought by floods in 2021. (AP Photo/Niranjan Shrestha)

Suntali Jyoti, 56, sits where her house and field once stood, in Chanaute, Melamchi, northeast from Kathmandu, Nepal, Sunday, Sept. 15, 2024, now covered with large rocks brought by floods in 2021. (AP Photo/Niranjan Shrestha)

Children play volleyball with a landslide-damaged hill visible in the background at Saraswati Secondary School in Gyalthum, Melamchi, northeast of Kathmandu, Nepal on Saturday, Sept. 14, 2024. (AP Photo/Niranjan Shrestha)

Sita Pandit, 50, walks in her house at Chanaute Market, Melamchi, northeast of Kathmandu, Nepal on Sunday, Sept. 15, 2024, that was damaged by floods in 2021. (AP Photo/Niranjan Shrestha)

Kali Prasad Shrestha, 57, stands near Kathmandu, Nepal, Sunday, Sept. 15, 2024, on the spot where his house once stood before it was swept away by floods in 2021.(AP Photo/Niranjan Shrestha)