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NEW YORK (AP) — U.S. stocks suffered their worst decline in months Thursday but remained firm.
The S&P 500 rose 0.3% in intraday trading. As of 11:30 a.m. ET, the Dow Jones Industrial Average was up 51 points, or 0.1%, and the Nasdaq Composite was up 0.4%.
A series of reports suggests that while inflationary pressures may be easing, the economy remains strong and beats recession expectations. Such data can potentially yield: federal reserve Investors want more evidence of slowing inflation before delivering the rate cuts they crave. Stocks tumbled a day earlier after the Fed chairman warned there wasn’t enough evidence yet.
Lower interest rates help all types of investments, but they tend to particularly benefit high-growth stocks. Tech stocks recovered some of their sharp losses from the day before, when Alphabet and Microsoft fell, even after the company announced stronger profits in its latest quarter than analysts had expected.
Microsoft rose 1.6% the day before, after falling 2.7%. Google’s parent company Alphabet rose 1.1% after falling 7.5%.
Big Tech stocks have soared much faster than the rest of the market over the past year and are facing sky-high expectations after recently breaking S&P 500 records. Metaplatforms, which operates Apple, Amazon, Facebook and Instagram, is scheduled to report its latest financial results after the day’s close. You also need to hit big numbers to justify a big jump.
Merck rose 3% after the pharmaceutical giant reported in the morning that its latest quarterly profit and sales beat analysts’ expectations. Etsy soared 8% after adding a partner from Elliott Investment Management to its board of directors, saying the company sees an opportunity to significantly increase its value.
Among the losers on Wall Street, New York Community Bancorp fell another 13.1% after plunging 37.7% a day earlier, as the company reported a much better-than-expected quarterly loss and took steps to shore up its financial position. The dividend was reduced. The startling report sent stocks of other local banks plummeting and brought back unpleasant memories of last year’s banking crisis, which led to the failures of Silicon Valley Bank, Signature Bank, and others.
New York Community Bancorp has acquired a large stake in Signature, and analysts say many of the company’s woes are related to that. But losses related to commercial real estate are a reminder of the challenges facing the industry as a whole. The KBW Nasdaq Regional Bank Index fell 4.4%, following Wednesday’s 6% decline.
MetLife fell 5.6% despite reporting stronger earnings and revenue than Wall Street expected. Analysts pointed to a forecast for 2024 that provided some numbers on the challenges the insurer had previously discussed.
Peloton Interactive fell 23.3% after the company’s future sales outlook was lower than analysts expected. That’s despite being roughly in line with expectations for the latest quarter.
In the bond market, the yield on the 10-year U.S. Treasury note fell to 3.84% from 3.92% late Wednesday.
It sank after reports of a slight increase in workers. applied for unemployment benefits Last week was better than expected. No one wants workers to lose their jobs, but the numbers are still low compared to history. And Wall Street wants the job market to calm down, which could curb inflationary pressures.
Another report offers similar encouragement to traders. The report said U.S. workers were much more productive than expected in the final three months of 2023, producing more goods per hour worked. Strong productivity growth could allow workers to earn larger wage increases without adding to inflationary pressures.
Gregory Daco, Chief Economist at EY, said: “If companies can achieve strong productivity growth, they can control costs and improve profits without sacrificing talent, even in an environment where wages continue to rise and pricing power declines. We will be able to protect it.”
Statistics released late in the morning suggested that U.S. manufacturing is improving after struggling for more than a year under the weight of high interest rates. Manufacturing activity contracted in January for the 15th straight month, but not as much as economists expected. According to the Supply Management Association, the increase in new orders is contributing to the revitalization of the industry.
However, a potential concern is that raw material prices rose in January after eight months of decline.
Traders are increasingly betting the U.S. Federal Reserve will start cutting interest rates in May after lowering expectations from March. If inflation does start, it would mark a sharp turnaround after the Fed raised its key interest rate to its highest level since 2001 in hopes of curbing inflation.
High interest rates intentionally slow down the economy and drive down investment prices.
In overseas stock markets, London’s FTSE 100 index fell 0.2% following the Bank of England’s announcement. maintain key interest rates The highest price in almost 16 years UK inflation unexpectedly rises to 4% During December.
Indexes declined in much of Europe and were mixed in Asia.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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