NEW YORK (AP) — Uncertainty over interest rates, corporate profits and wars in the Middle East is pulling Wall Street in the opposite direction, sending stocks into a spiraling doldrums Thursday.
The S&P 500 was down 0.1% in afternoon trading after bouncing between gains and losses several times. As of 1:55 p.m. ET, the Dow Jones Industrial Average was up 22 points, or less than 0.1%, and the Nasdaq Composite was down 0.2%. teslaNetflix and other influential companies provided a variety of profit reports.
Rising bond market yields have put increased pressure on Wall Street, which has been a major reason for the stock market’s struggles since the summer. The yield on the 10-year U.S. Treasury rose from 4.91% late Wednesday to hit 4.99% for the first time since 2007, before narrowing its rise to 4.96%.
Yields have since fluctuated Chairman of the Federal Reserve Board He reiterated that the central bank will closely monitor developments in the economy and inflation before making any further decisions on interest rates.
Meanwhile, crude oil prices rose further after erasing losses from the morning. The day before, they jumped on the following concerns: war in the middle east This may lead to supply interruptions.
Because there are so many moving parts, the focus has been on U.S. Treasuries, which serve as the reference point for most financial markets. The Federal Reserve is likely to keep key interest rates high for an extended period of time as a resilient US economy forces investors to accept the new normal, with the 10-year Treasury yield rising from below 3.50% in the spring. It continues to rise almost steadily.
The Fed is trying to reduce inflation, but high interest rates do so by depressing investment prices, corporate profits, and the overall economy. The new environment of high interest rates will be a harsh change for a generation of investors who previously enjoyed mostly very low interest rates.
Fed Chairman Jerome Powell said in a speech Thursday that the Fed could be forced to raise rates further if U.S. economic growth looks sustainably strong. But he also noted that the recent rise in long-term bond yields, such as the 10-year Treasury, is fulfilling part of the Fed’s job by slowing the economy without requiring additional interest rate hikes.
Another report was released Thursday showing the U.S. job market remains remarkably strong, even though the Federal Reserve has already cut its key policy rate to its highest level since 2001. unemployment allowance Last week’s numbers were higher than expected, indicating low levels of layoffs nationwide.
That’s good for an economy that has defied recession predictions, but it could also fuel inflation even further.
But another report said manufacturing in the Mid-Atlantic region was weaker than economists expected. Manufacturing has been one part of the economy that has been particularly hard hit by high interest rates.
The housing market is also feeling the pain of high interest rates, with mortgage rates at their highest level since 2000. The third report on Thursday said: Sales of used homes have decreased Although last month’s performance was not as strong as economists expected,
High yields hurt all kinds of stocks, but they’re especially hard on stocks that have risen in value on expectations for big growth in the distant future or that are seen as very expensive. Big tech companies have been in the spotlight a lot lately, with some companies reporting mixed returns.
tesla The stock fell 9.5% after reporting weaker-than-expected summer results than analysts expected. Although they are cutting prices to increase sales, they are also putting pressure on profits.
On the other side, Netflix, up 16.3%. The company reported its latest quarterly profit was stronger than analysts expected and announced it would raise prices at some membership levels to boost revenue.
KeyCorp rose 2.3% after reporting better-than-expected summer profits. The company and other banks smaller than the industry’s biggest players suffered earlier this year, when high interest rates contributed in part to three high-profile bank failures.
Zions Bancorp also fell 5.7% despite reporting better-than-expected profits in its latest quarter.
american airlines The stock rose 1.9% after the company announced better-than-expected profits during the busy summer season. The airline and other airlines recouped some of the previous day’s steep losses. united airlines It warned that rising fuel prices and the suspension of flights to Tel Aviv would significantly hurt profits at the end of the year.
Overall, analysts expect companies included in the S&P 500 index to report: slight growth Comparison of summer earnings per share and the same period last year. If that happens, it would be the first time in a year that we have seen such growth.
In the oil market, the benchmark US crude oil rose 1.1% to $88.23 per barrel after erasing previous losses. Brent crude, the international standard crude, rose 0.8% to $92.21. Both stocks rose at least $1.60 a day earlier on concerns that the recent Hamas-Israel war could involve Iran, Saudi Arabia and other major oil producers.
In overseas stock markets, indexes also fell across Europe, after further sharp declines across Asia.
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.