Tuesday, May 28, 2024

Stock market today: Wall Street ticks higher to trim its losses for the week

by BIZ Magazine

NEW YORK (AP) — U.S. stocks are rising Thursday to trim their losses for the week.

The S&P 500 was 0.5% higher in early trading, a day after swinging sharply when the Federal Reserve said it’s likely delaying cuts to interest rates but not planning to hike them. The Dow Jones Industrial Average was up 146 points, or 0.4%, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.7% higher.

Strong earnings reports from several big companies helped drive the market. Qualcomm rose 8.4% after topping forecasts for profit and revenue in the latest quarter. The tech company also gave forecasted ranges for upcoming revenue and profit whose midpoints topped analysts’ expectations.

MGM Resorts International roared 5.9% higher after likewise topping forecasts for profit and revenue. It credited stronger traffic at MGM China, which ramped up as COVID-19 restrictions fell away in Macau.

Carvana revved 35.1% higher after the used-car seller reported much better results for the latest quarter than analysts expected, boosted by better-than-forecast sales.

Peloton Interactive jumped 8.4% after it said it would cut roughly 400 jobs as part of a program to save $200 million in costs annually. It also said its CEO, Barry McCarthy, is stepping down. The company’s stock had fallen to a record low last week.

They helped to offset a 17.9% drop for Etsy, which only roughly matched analysts’ expectations for results and revenue. It cited a “still challenging” environment where customers broadly are more selective about the non-essentials they’re buying.

DoorDash sank 12.5% after reporting a worse loss than expected. The company, which has been spending more on personnel and research and development, also gave a forecasted range for underlying earnings in the current quarter whose midpoint fell short of analysts’ expectations.

In the bond market, which has been helping to dictate much of the stock market’s movements recently, yields were mixed following some economic reports.

One showed that fewer U.S. workers applied for unemployment benefits last week than economists expected. It’s the latest signal that the job market remains solid despite high interest rates.

A separate, potentially more disappointing report for Wall Street suggested growth in how much U.S. workers produced per hour worked was weaker at the start of 2024 than economists expected. A measure comparing labor costs to productivity, meanwhile, rose by more than expected in the preliminary report. That could put upward pressure on inflation, which is one of the biggest fears on Wall Street.

The economy is in a tight spot, where the hope is that it remains strong enough to stay out of a recession but not so strong that it worsens the already stalled progress on inflation.

Stubbornly high readings on inflation this year are what pushed Federal Reserve Chair Jerome Powell to say on Wednesday that it will likely take “longer than previously expected” to get enough confidence inflation is under control that it can cut interest rates.

The Fed’s main interest rate has been sitting at its highest level since 2001, and cuts would release some pressure on the economy and financial markets.

After coming into the year forecasting six or more cuts to rates in 2024, traders are now betting on just one or two, if any, according to data from CME Group.

The yield on the 10-year Treasury ticked up to 4.64% from 4.63% late Wednesday. The two-year yield, which moves more closely with expectations for the Fed, slipped to 4.94% from 4.97%.

On Friday, the government will release its comprehensive monthly jobs update, which could further swing expectations for when the Fed could ultimately cut rates.

In stock markets abroad, indexes were mixed across Asia and Europe. Hong Kong’s Hang Seng jumped 2.5%, while other markets in China were closed for a holiday.

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