Stocks were shaking off early declines Friday as investors digested the latest wave of earnings and a hotter-than-expected reading from the Federal Reserve’s preferred inflation measure. The Dow Jones Industrial Average was up 101 points, or 0.3%, while the S&P 500 rose 0.3%. Both indexes opened in negative territory. The Nasdaq Composite was flat. The Associated Press has the story:
Wall Street Stocks drift at end of bumpy week
Newslooks- NEW YORK (AP)
The S&P 500 was barely moving in early trading. Despite big swings earlier this week, it’s on pace for only a tiny loss. It’s also on track to close out April with a modest gain, as markets keep churning amid unanswered questions about where the economy and corporate profits are heading.
The Dow Jones Industrial Average was virtually unchanged at 33,826, as of 9:45 a.m. Eastern time, while the Nasdaq composite was 0.4% lower.
Amazon weighed heavily on the market despite reporting stronger profit and revenue for the latest quarter than expected. It fell 4.6% as analysts pointed to a slowdown in revenue growth at its AWS cloud computing business.
Snap tumbled 18.4% after its revenue for the latest quarter fell short of forecasts. Pinterest also fell sharply, down 15.2%, despite reporting stronger results than expected. Analysts pointed to its growth forecast for the current quarter, which looked more tepid than some expected.
Wall Street has focused heavily on what CEOs are saying about their upcoming trends given how much uncertainty is ahead about where the economy and interest rates are heading. The economy is slowing under the weight of much higher interest rates meant to get high inflation under control.
The majority of companies so far this reporting season have beaten expectations, but the bar was set considerably low for the first three months of the year. Wall Street is worried that continued weakness could lead to a third straight drop in earnings for S&P 500 companies in the second quarter of the year.
Recent economic reports have firmed expectations on Wall Street that the Federal Reserve will raise interest rates again at its next meeting next week. Some traders are also betting on a possibility the Fed may raise rates again in June.
A report on Friday said the inflation measure that the Fed prefers to use came in close to expectations for March, but it remains well above the target.
Total compensation for workers also rose more during the first three months of the year than economists expected. While that’s welcome news for workers trying to keep up with still-rising prices at registers, the Fed fears that could help make high inflation more entrenched.
“Bottom line, inflation is still above target, and the Fed is poised to raise interest rates again next week — and leave them at high levels for quite a while,” said Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office.
The Fed has raised its key overnight interest rate to its highest level since 2007, up from its record low, following a barrage of hikes since early last year. Together, they’ve already slowed the economy’s growth down to an estimated 1.1% annual rate at the start of this year.
They’ve also caused cracks in the banking system, with the second- and third-largest U.S. bank failures in history rocking global markets last month. Investors are hunting for other weak links, and the spotlight has been particularly harsh on First Republic Bank. Its stock more than halved this week after it gave details about how much in deposits its customers have yanked.
First Republic rose 0.3% Friday, ahead of a highly anticipated report by the Federal Reserve on its supervision of Silicon Valley Bank. That’s the bank whose failure set off the industry’s turmoil.
On the winning side of Wall Street was Intel, which rose 6.7% after reporting a milder loss than expected and stronger revenue for the latest quarter.
Exxon Mobil added 1.3% after it also reported stronger profit and revenue than forecast.
In the bond market, the yield on the 10-year Treasury fell to 3.46% from 3.52% late Thursday. It helps set rates for mortgages and other important loans. The two-year yield, which more closely tracks expectations for the Fed, was holding steady at 4.08%.
In markets abroad, stock indexes were mixed in Europe and mostly higher across Asia.
Japan’s Nikkei 225 stock index rose 1.4%, and the Japanese yen fell against the dollar.
In its first policy meeting under its new governor, Kazuo Ueda, the Bank of Japan kept its key policy rate at negative 0.1% even as inflation in the country continues to overshoot its target.