Wednesday, July 24, 2024

Stock market today: Wall Street rises ahead of what’s hoped to be the last Fed rate hike in a while

by Associated Press

NEW YORK (AP) — Wall Street is ticking higher Monday to start a week full of updates on where interest rates and profits for some of the stock market’s most influential companies are heading.

The S&P 500 was 0.3% higher in morning trading, coming off its eighth winning week in the last 10. The Dow Jones Industrial Average was up 158 points, or 0.5%, at 35,386, as of 10:15 a.m. Eastern time, and the Nasdaq composite was 0.1% higher.

Becton Dickinson jumped 7.5% for the largest gain in the S&P 500 after it said it will return to full commercial operations for its updated Alaris infusion system after earlier recalls. It received a clearance from the U.S. Food and Drug Administration for the system, which delivers medications and other products to patients.

Domino’s Pizza was 0.1% higher after swinging between gains and losses on a mixed earnings report for the spring. Its profit for the latest quarter topped expectations, but its revenue fell short after customers ordered less than a year earlier.

The pizza chain is at the head of the line this week as roughly 30% of the companies in the S&P 500 tell investors how they did from April through June. Key among them are three Big Tech behemoths that have grown so large that their stock movements often dictate where the S&P 500 goes.

Alphabet, Meta Platforms and Microsoft will all report their results this week, and they’re three of the seven stocks that accounted for the majority of the S&P 500’s gain in the first half of the year. Each of the three has soared at least 35% for this year so far, and they’ll need to deliver strong numbers to justify their big rallies.

The market’s top stocks have become so big and their movements so influential over the market that Nasdaq rebalanced its Nasdaq 100 index before trading began, to lessen the impact some stocks have on the overall index.

Perhaps even more important than how profits at the Big Tech titans go is what the Federal Reserve will say Wednesday at its latest meeting on interest rates.

The wide expectation is that the Fed will raise its federal funds rate again, to its highest level since 2001, as it fights to bring inflation down. But the hope among traders is that will be the final increase of this cycle because inflation has been cooling since last summer.

High rates undercut inflation by slowing the entire economy in a blunt move, as well as by hurting prices for stocks and other investments. That caused many investors to brace for a recession, but the economy has so far remained resilient due largely to a remarkably solid job market.

A report on Monday suggested the U.S. services industry is continuing to grow, but at a slower pace than economists expected. On the upside for the economy, the preliminary report from S&P Global also suggested U.S. manufacturing isn’t doing as badly as feared. Overall, growth in business activity during July appears to be at its slowest in five months.

Stocks have rallied hard this year on hopes that the economy can continue to grow as inflation cools enough to get the Fed to not only stop hiking rates but to begin cutting them next year. Such a not-too-hot and not-too-cold outcome would mean the Fed pulls off a tricky “soft landing” for the economy.

“A lot would need to go right for such an outcome, in our view,” strategists at BlackRock Investment Institute wrote in a report. Rate hikes take a notoriously long time to take full effect across the economy, and they can cause unanticipated parts of it to break.

The BlackRock strategists also warn profits may be under pressure in the second half of the year as increased wages for workers eat into profit margins.

The big run for stocks in the S&P 500 this year also leaves the market looking expensive compared with history, even outside the big seven stocks that have driven most of the gains, according to Doug Ramsey, chief investment officer of The Leuthold Group.

He calls this “another chance to buy high” after the market’s rebound from the 2020 COVID crash.

Public Storage, which runs self-storage facilities, rose 0.6% after it said it would buy Simply Self Storage for $2.2 billion from Blackstone Real Estate Income Trust.

In the bond market, yields slipped.

The yield on the 10-year Treasury fell to 3.80% from 3.84% late Friday. It helps set rates for mortgages and other important loans.

In markets abroad, European stocks were slipping after data suggested manufacturing and services industries across the continent are weaker than expected. In Asia, stock indexes were mixed. Hong Kong’s benchmark sank 2.1%, and stocks in Shanghai slipped 0.1%. But they were stronger in Tokyo and Seoul.

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