Thursday, July 18, 2024

Stock market today: Wall Street hangs at record heights ahead of inflation report

by Associated Press

NEW YORK (AP) — Wall Street is holding relatively steady Monday following its latest record-setting week.

The S&P 500 was virtually unchanged in early trading after closing Friday above the 5,000 level for the first time. The Dow Jones Industrial Average was edging down by 20 points, or 0.1%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.1% higher.

Conditions are calm across markets, with yields also moving relatively little in the bond market. The next big event for the market could be Tuesday’s update on inflation across the United States, which economists expect to show a drop back below the 3% level.

In the meantime, Diamondback Energy climbed 5.2% after it said it would buy Endeavor Energy Resources in a deal valued at roughly $26 billion, including Endeavor’s debt. Diamondback is using both cash and stock to pay for the purchase of the privately held exploration and production company.

Trimble flipped from an early loss to a gain of 2.8% after the technology provider reported stronger profit and revenue for the latest quarter than analysts expected. The company, whose products are used in the construction, mapping and other industries, also gave a forecast for revenue over 2024 that fell short of Wall Street’s estimates.

Big companies in the S&P 500 have mostly been reporting better results than expected for the final three months of 2023. More than two thirds of the companies in the index have already reported their results, but several big names are still to come this upcoming week. They include Coca-Cola on Tuesday, Kraft Heinz on Wednesday and Southern Co. on Thursday.

The smallest companies in the market, meanwhile, are still in the relatively early days of their profit reporting season. But they’ve been beating analysts’ expectations by even more than their big rivals, according to Bank of America strategists.

Worries have grown about how top-heavy the stock market has become, where the seven biggest companies have accounted for a disproportionate amount of the S&P 500’s rally to a record. If more companies aside from the group known as the “Magnificent Seven” can deliver strong profit growth, it could soften the criticism that the market has become too expensive.

Another worry for the market has been uncertainty about just how much danger lurks for the economy in the loans and other holdings banks have on their balance sheets that are tied to commercial real estate.

The widespread expectation, even among top U.S. government officials, is that weakness for office buildings and other commercial projects will mean at least some pain for banks. But no one can say how much for sure.

That’s why so much focus has been on New York Community Bancorp recently. It shocked investors roughly two weeks ago when it announced a surprise loss for its latest quarter. Some of the pain was due to its acquisition of Signature Bank during the industry’s mini-crisis last year. But worries about commercial real estate also played a role.

New York Community Bancorp’s stock has roughly halved since that surprise report, but it was doing better on Monday. It rose 4.5%.

An index measuring stock prices across the regional banking industry was also slightly higher, up 0.3%.

In the bond market, yields were holding relatively steady. The yield on the 10-year Treasury slipped to 4.16% from 4.18% late Friday.

The two-year Treasury yield, which more closely tracks expectations for the Federal Reserve edged up to 4.49% from 4.48% late Friday.

Inflation has been cooling enough that the Federal Reserve has hinted it may cut its main interest rate several times this year. Such cuts typically juice financial markets and the economy, and they would release pressure that’s built up since the Fed has taken its main interest rate to the highest level since 2001.

After earlier hoping cuts to rates could begin as soon as March, traders have since pushed their forecasts out to May or June. Reports showing the U.S. economy and job market remain remarkably solid, along with some comments from Fed officials, have been forcing the delays.

In stock markets abroad, indexes were mixed in Europe. In Asia, several markets were closed for holidays.

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