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NEW YORK (AP) —
Wall Street was mixed on Monday ahead of a week packed with reports that could move markets towards the end.
The S&P 500 rose 0.2% in early trading, snapping off its first losing week in the past 10 weeks. As of 9:40 a.m. ET, the Dow Jones Industrial Average was down 166 points, or 0.4%, and the Nasdaq Composite Index was up 0.6%.
Boeing Co. was the biggest drag on the Dow Jones Industrial Average in early trading after one of its jets exploded over Oregon. It fell 8.8%. Spirit AeroSystems, which makes airframes and other parts for Boeing Co., fell 13.3%.
Stock prices for oil and gas companies were also particularly weak as crude oil prices fell by more than 4%. Exxon Mobil fell 3.2% and Chevron fell 2.3%.
But much of the rest of Wall Street was holding up better. Commercial Metals rose 4.1% after reporting its latest quarterly profit beat analysts’ expectations. The report said construction activity is healthy in North America, driving demand for steel and helping offset Europe’s economic downturn.
More earnings releases are expected this weekend, with Delta Air Lines, JPMorgan Chase & Co., UnitedHealth Group Inc. and others on Friday kicking off the S&P 500’s earnings season for the final three months of 2023.
The highlight of the week may be the release of the latest inflation data for U.S. consumers on Thursday. The cooldown there helped fuel high hopes on Wall Street that there would soon be enough improvement for the Federal Reserve to not only stop raising rates, but to start cutting them.
The Fed has already raised its key interest rate to its highest level since 2001 in an effort to combat high inflation, which will strain the economy and depress investment prices. The Fed said last month that the economy was improving, and Wall Street expected it to start cutting rates as early as March.
Those expectations have already led bond markets to lower U.S. Treasury yields, which remained relatively stable on Monday. The yield on the 10-year U.S. Treasury note fell to 4.02% from 4.05% late Friday. In October, it rose above 5%, the highest level since 2007, putting sharp downward pressure on the stock market.
As a result, stock prices rose and the S&P 500 index neared all-time highs. But that strength has some on Wall Street saying a lull in stocks is likely, at least in the short term. Lisa Charette, chief investment officer at Morgan Stanley Wealth Management, said the market looks “very expensive.”
Critics also warn that Wall Street traders may be too optimistic about how far the Federal Reserve will cut interest rates this year. The Fed has indicated there will likely be three rate cuts in 2024, but traders are betting on about twice as many. Critics say such high numbers may not be possible unless a recession hits and the Fed is forced to intervene.
That has put a lot of focus on corporate profits, where growth could help support stock prices.
Analysts expect earnings per share for S&P 500 companies to increase 1.3% in the fourth quarter of 2023 from a year ago, according to FactSet. Although this is a relatively small number, it marks the second consecutive quarter of growth.
Despite concerns about a looming recession since the beginning of last year, the economy has remained resilient so far. This helped protect the company’s bottom line. But costs are rising as inflation remains high across the economy, weighing on profits.
Helen of Troy, whose brands include Hydro Flask, Osprey and Screwdriver, rose 1% after reporting stronger profit than analysts expected for its latest fiscal quarter. Incoming CEO Noel Geoffroy said the company’s results had exceeded expectations despite a “remaining challenging macro consumer environment”.
Elsewhere on Wall Street, the fallout from the explosion of a Boeing jet flown by Alaska Airlines over the weekend was widespread. Alaska Airlines Group fell 4.2%. United Airlines, which operates the same Boeing aircraft and had to cancel flights due to the grounding, started lower, but quickly began to rise slightly.
Overseas stock markets vary.
Hong Kong’s Hang Seng shares fell 1.9%, led by losses in real estate and technology stocks, while Shanghai stocks also fell 1.4%.
Real estate stocks fell after Zhongzhi Enterprise Group, a major lender to real estate developers, filed for bankruptcy in Beijing. China also announced sanctions on five U.S. defense companies on Sunday in response to U.S. arms sales to Taiwan and U.S. sanctions against Chinese companies and individuals.
The announcement was made ahead of Taiwan’s general election, which will focus on relations between the autonomous island and China, which claims it as its own territory.
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AP writers Zimo Zhong and Matt Ott contributed.
Stan Cho, Associated Press
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