NEW YORK (AP) – Wall Street’s monster rally since Halloween was slowing down Wednesday after mixed reports showing disappointing profits for companies. unexpected strength For the sake of the economy.
The S&P 500 rose 0.2% in afternoon trading, coming within 0.4% of its all-time high set nearly two years ago. The Dow Jones Industrial Average rose 63 points (0.2%), setting a new record. As of 1 p.m. ET, the Nasdaq Composite was up 0.3%.
FedEx fell 10.9% after the company reported sales and profits for the latest quarter were lower than analysts expected. Additionally, due to demand pressure, full-year sales are not expected to remain flat and are expected to decline year-on-year.
Parcel delivery companies facilitate commerce around the world, and signals of weak demand could undermine expectations that have fueled Wall Street’s recent rally. That is, the hope is that the Fed can land the economy perfectly by slowing it down enough to curb high inflation, but not enough to cause a recession.
Winnebago Industries, which makes campers and other recreational products, also reported lower profits than analysts expected in its latest quarter. The company said “market conditions” led to lower unit sales compared to the previous year and it had to offer higher discounts. The company’s stock fell 1.8%.
General Mills, which sells Progresso soup and Yoplait yogurt, reported better-than-expected profits for its latest quarter, but revenue fell as volumes recovered more slowly than expected. The company said key sales metrics could decline for the full year due to a “more cautious consumer economic outlook” and other factors. The company’s stock price fell 2.2%.
Still, two reports indicated that the U.S. economy may be performing better overall than expected. December consumer confidence and Sale of used houses The economy improved in November better than economists expected. In response to this report, the S&P 500 was able to reverse its slight decline in the morning.
There continue to be positive signs that inflation is cooling around the world.Inflation in the UK in November It was unexpectedly late It rose to 3.9% from 4.6% in October, the lowest level since 2021.
Moderating inflation has raised hopes that the world’s central banks will be able to pivot from sharp interest rate hike campaigns in 2024 to prevent further significant price rises. For the Fed in particular, its key interest rate is expected to fall by at least 1.50 percentage points in 2024 from its current range of 5.25% to 5.50%, the highest level in more than 20 years.
Those expectations have led U.S. bond yields to fall since late October, and they fell again after the UK’s inflation report.
The yield on the 10-year U.S. Treasury note fell to 3.89% from 3.93% late Tuesday. In October, it exceeded 5%, the highest level since 2007, putting severe downward pressure on the stock market.
Lower interest rates and yields not only help economic growth by lowering the cost of borrowing, but also push up investment prices and ease pressure on the financial system as a whole.
U.S. stocks remain on track for a good week as yields fall. Large internet companies were the market leaders on Wednesday, with Alphabet up 2.9% and Amazon up 0.7%.
Stocks of oil and gas companies also performed well, as crude oil prices recovered further from the steep declines of recent months.
Overall, the S&P 500 just came off a seven-week streak of gains, the longest such streak in six years.
“The market pendulum has swung from extreme pessimism to extreme optimism in less than two months,” said Mark Hackett, head of investment research at Nationwide.
However, the strength and length of the rise has led to growing criticism that the stock price has simply risen too much.
It remains to be seen whether the Fed can walk a tightrope that seemed nearly impossible not too long ago. And critics say the number of interest rate cuts that Wall Street expects in 2024 is unlikely to materialize unless the economy goes into recession, which could hurt corporate profits and, by extension, stock prices. It is pointed out that there is a sex.
Some U.S. Federal Reserve officials have also recently commented that it is too early to consider cutting interest rates in March, when most traders expect them to begin, according to data from CME Group. is out.
In overseas stock markets, London’s FTSE 100 index rose 1% on encouraging UK inflation reports. Indexes also rose in much of Asia, but stocks fell 1% in Shanghai after China left its benchmark lending rate unchanged in a monthly decision on Wednesday.
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AP Business Writer Matt Ott contributed to this report.
