By Elaine Kirtenbach

TOKYO (AP) — Asian shares fell on Wednesday after ending with mixed results on Wall Street as markets braced for a possible recession.

Tokyo’s Nikkei 225 index fell 2.2 percent to 25,984.51, while Seoul’s Kospi fell 2.8 percent to 2,161.86. In Sydney, the S&P/ASX 200 fell 0.8% to 6,443.30.

Hong Kong’s Hang Seng fell 2.1 percent to 17,483.89 and the Shanghai Composite Index fell 0.8 percent to 3,068.59. Taiwan’s benchmark fell 2.1 percent.

The week began with a broad selloff that sent the Dow Jones Industrial Average into a bear market, joining other major U.S. indexes.

On Tuesday, the S&P 500 fell 0.2% to 3,647.29, its sixth straight loss. The Dow fell 0.4 percent to 29,134.99, while the Nasdaq Composite gained 0.2 percent to close at 10,829.50.

Small-cap stocks outperformed the broader market. The Russell 2000 gained 0.4 percent to close at 1,662.51.

Major indexes remain in an extended slump. With just days left in September, stocks are headed for another losing month as markets worry that higher interest rates to fight inflation could tip the economy into recession.

The S&P 500 is down nearly 8 percent in September and has been in a bear market since June, when it fell more than 20 percent from its all-time high set on Jan. 4. Company as benchmark index and tech-heavy Nasdaq.

Central banks around the world are raising interest rates in an effort to make borrowing more expensive and cool the highest inflation in decades. The Federal Reserve has been particularly aggressive and raised its benchmark rate, which affects many consumer and business loans, again last week. Now it is in the range of 3% to 3.25%. At the beginning of the year, it was virtually at zero.

The Fed also released a forecast that suggested its benchmark rate could be 4.4 percent by the end of the year, a full percentage point higher than it envisioned in June.

Wall Street fears the Fed will apply the brakes too hard on an already sluggish economy and push it into recession. Higher interest rates weigh on stocks, especially valuable technology companies, which look less attractive to investors as rates rise.

Energy stocks rose as U.S. oil prices rose 2.3 percent. Exxon Mobil rose 2.1 percent.

Bond yields were mostly higher on Tuesday. The 2-year Treasury yield, which tracks expectations of Federal Reserve action, fell to 4.31% from 4.34% late Monday. It is trading at its highest level since 2007. The yield on the 10-year Treasury, which influences mortgage rates, rose to 3.98% from 3.93%.

Investors will be watching the next round of corporate earnings closely to better gauge how companies are handling inflation. Companies will begin reporting their latest quarterly results in early October.

Consumer confidence remains strong despite higher prices for everything from food to clothing. The Conference Board’s latest consumer confidence report for September showed confidence was stronger than economists expected.

The government will release its weekly report on unemployment benefits on Thursday, along with the latest second-quarter gross domestic product report. On Friday, the government will release another report on personal income and spending that will help provide more details on where and how inflation is hurting consumer spending.

In other trading on Wednesday, U.S. benchmark crude fell $1.15 to $77.35 a barrel in electronic trading on the New York Mercantile Exchange.

Brent crude, used to measure international oil prices, fell $1.26 to $83.61 a barrel in London.

The dollar fell to 144.65 Japanese yen from 144.81 yen. The euro was down at 95.59 cents from 95.92 cents.


AP Business writers Damian J. Trois and Alex Vega contributed.