Thursday, April 18, 2024

Stock market today: Stocks drift, and yields ease after weak report on retail sales

by Associated Press

NEW YORK (AP) — U.S. stocks are drifting Thursday following mixed reports on the economy, as this week’s big swings on Wall Street calm a bit.

The S&P 500 was 0.2% higher in early trading, coming off a 1% jump that followed a 1.4% tumble. The Dow Jones Industrial Average was up 96 points, or 0.3%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was virtually unchanged.

TripAdvisor jumped 8.1% after reporting stronger results for the latest quarter than analysts expected. Tech giant Cisco Systems also reported better-than-anticipated results, but its stock sank 2.7% after it cut its profit forecast for its full fiscal year.

The mixed set of data on the economy included a report showing sales at U.S. retailers weakened by more in January from December than expected. It was a striking drop in spending by U.S. households, whose strength despite high interest rates has helped keep the economy out of a recession. But the drop could also remove some upward pressure on inflation.

A separate report said fewer U.S. workers applied for unemployment benefits last week than expected, the latest signal of a solid job market despite high-profile announcements of layoffs. Other reports painted a mixed but better-than-feared picture of the manufacturing industry.

Altogether, the economic reports helped send Treasury yields lower in the bond market. Worries about future losses by stock investors also eased immediately after the early-morning data dump.

The yield on the 10-year Treasury fell to 4.19% from 4.27% late Wednesday.

Treasury yields have been swiveling recently. Stronger-than-expected reports on inflation, the job market and the overall economy have forced traders on Wall Street to delay their forecasts for when the Federal Reserve will begin cutting interest rates.

The Fed has already hiked its main interest rate to the highest level since 2001. The hope is that high rates will squeeze the economy just enough to get inflation down to a comfortable level without causing a recession.

After earlier hoping the Fed may offer some relief and begin cutting rates in March, the thinking on Wall Street is now that won’t happen until May or maybe June. That delay in turn has knocked stocks down from their record highs.

Still, the widespread expectation remains for cuts to rates to come this year. It’s just the timing that is changing. In the meantime, the economy continues to look solid, which should help drive growth in profits for companies. That’s helping to keep stocks from falling very much.

One risk that could upset things is the upcoming U.S. election. The Fed does not like to shift from holding rates steady to cutting too close to an election, according to Bank of America strategists led by Mark Cabana. So if the Fed doesn’t move by June, the possibility rises that it may end up holding rates steady until late 2024 or early 2025.

Still, Cabana said where yields ultimately go will depend more on how far the Fed ends up cutting rates, more than when it begins.

In stock markets abroad, the Nikkei 225 rose 1.2% after Japan said its economy shrank for a second consecutive quarter. It dropped behind Germany to become the world’s fourth-largest economy, and the weakness raised expectations that Japan’s central bank may keep interest rates very easy.

The United Kingdom also reported its economy shrank for a second straight quarter. The FTSE 100 index in London inched up by 0.1%, while stocks were up a bit more across Europe.

You may also like

-
00:00
00:00
Update Required Flash plugin
-
00:00
00:00