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NEW YORK (AP) – Wall Street fell on Tuesday after a lackluster resumption of trading after a three-day holiday.
The S&P 500 fell 0.6% in afternoon trading, staying within 0.9% of its all-time high set two years ago. As of 2:03 pm ET, the Dow Jones Industrial Average was down 335 points (0.9%) and the Nasdaq Composite was down 0.5%.
Morgan Stanley reported a $535 million decline in pre-tax profit for the final three months of 2023, falling 5% due to legal issues and special assessments. goldman sachs The stock rose 0.1% after the company reported results that beat Wall Street expectations.
If Wall Street analysts’ predictions are to be believed, fourth-quarter profits for S&P 500 companies could increase only slightly, if at all, from a year ago. Earnings have been under pressure for more than a year due to rising costs due to high inflation.
However, there is a lot of optimism for 2024, with analysts predicting a strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. This, along with high expectations that the Federal Reserve will cut interest rates several times this year, has helped propel the S&P 500 to victory in 10 of the past 11 weeks.
In the bond market, expectations for a rate cut have already caused U.S. Treasury yields to fall sharply, with traders predicting a rate cut could begin as early as March. This is a sharp turnaround from years past, when the Federal Reserve raised interest rates sharply in hopes of curbing high inflation.
Easing interest rates and yields eases pressure on the economy and financial system, while also boosting investment prices. And over the past six months, interest rates have been the main force moving the stock market, according to Morgan Stanley strategist Michael Wilson.
He believes this momentum will continue in the short term, with “bond markets still in charge.”
For now, traders are planning to cut interest rates much more by 2024 than the Fed itself has indicated. As a result, there is a growing possibility that the market will fluctuate significantly every time there is a speech or economic report from Fed officials.
Yields fluctuated in the bond market on Tuesday. Federal Reserve President Christopher Waller said: In his speech, he said that “policies are set appropriately” regarding interest rates.
Yields initially rose, but retreated after Waller said the slowing trend in inflation made him “more confident than we have been since 2021 that inflation is on track toward the Fed’s 2% target.” did. This should allow the Fed to cut interest rates this year “unless inflation recovers and remains high.”
Until then, the economy is strong and the Fed can wait and monitor future data before taking next action, Waller said. “We can take our time and make sure this is done correctly,” he said.
The yield on the 10-year U.S. Treasury rose to 4.07% from 3.95% late Friday. Rising yields could weigh on corporate earnings, among other negative factors for investors, but the 10-year Treasury yield remains well below the 5% level reached in October.
On Wall Street, Boeing Co. was one of the biggest decliners in the market as concerns continued. Trouble occurs on 737 Max 9 aircraft In response to the recent explosion on board an Alaska Airlines passenger plane. Boeing fell 8%.
Spirit Airlines plunges 50% after federal judge’s ruling Blocking sale to JetBlue Airways, said the $3.8 billion contract would reduce competition. JetBlue rose 4.4%.
Those on the winning side were Carroll’s Restaurant Group, Burger King’s largest franchisee In the US, it rose 12.6%. Restaurant Brands International announced that it will purchase all of the shares of Carroll’s it does not already own for $9.55 per share in cash.
Most overseas stock markets also fell, including Japan’s stock market, which had been on a winning streak, to its highest level since the bursting of the bubble in 1990.
The Nikkei Stock Average fell 0.8% as the value of the Japanese yen rose against other currencies. The strong yen could weigh on profits for Japan’s exporters, rising on expectations that the Bank of Japan is preparing to end its years-long policy of keeping interest rates below zero.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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