U.S. stocks are holding firmer Wednesday, and the S&P 500 is rising in early trading to potentially break its three-day losing streak. The index added 0.4% following a mixed set of earnings reports from big companies The Dow Jones Industrial Average was up 114 points, or 0.3%, and the Nasdaq composite was 0.4% higher.
Quick Read
- Market Movements: U.S. stocks are showing strength with the S&P 500 rising by 0.4% in early trading, potentially ending a three-day losing streak. The Dow Jones Industrial Average increased by 114 points, or 0.3%, and the Nasdaq composite rose by 0.4%.
- Individual Performers: United Airlines shares jumped 7.6% following stronger-than-expected quarterly results, boosted by robust business traveler demand. Conversely, Travelers saw a 7% decline after its quarterly earnings fell short, impacted by higher catastrophe losses.
- Bond Market Influence: The easing of Treasury yields is relieving some pressure on the stock market, with the 10-year yield dropping to 4.62% from 4.67% and the two-year yield down to 4.95% from 4.99%.
- Federal Reserve’s Stance: Recent comments from Federal Reserve officials suggest that the central bank might maintain its key interest rate at its highest level since 2001 for an extended period, aiming to ensure inflation approaches its 2% target more reliably.
- Economic Concerns: Despite high interest rates posing risks to investment prices and potentially leading to a recession, persistent high inflation remains a concern for the Fed.
- Interest Rate Expectations: Market traders now largely anticipate only one or two rate cuts from the Federal Reserve this year, a significant shift from earlier expectations of six or more cuts.
- Corporate Earnings Impact: Companies are under pressure to post strong profits to support their stock valuations, with little immediate relief from interest rate cuts expected. Omnicom Group rose 3% after surpassing profit expectations and noting growth in most markets.
- Healthcare Sector Movement: Eli Lilly gained 1.9% after reporting positive results from a phase 3 trial for a sleep apnea treatment, sparking optimism for its profit outlook.
- Transport Sector Challenges: J.B. Hunt Transport Services faced a 7.6% drop due to disappointing revenue and earnings, impacted by regional competition and increased labor costs.
- Global Market Trends: In international markets, the FTSE 100 increased by 0.8% following a report indicating the lowest inflation rate in the U.K. in two and a half years, which might lead to interest rate cuts there. Other European markets also saw gains, while Asian markets showed mixed results, with a decline in Japan’s Nikkei 225 and a rise in Shanghai’s stock market.
The Associated Press has the story:
Wall Street ticks higher as pressure eases from the bond market
Newslooks- NEW YORK (AP) —
U.S. stocks are holding firmer Wednesday, and the S&P 500 is rising in early trading to potentially break its three-day losing streak. The index added 0.4% following a mixed set of earnings reports from big companies The Dow Jones Industrial Average was up 114 points, or 0.3%, and the Nasdaq composite was 0.4% higher.
United Airlines soared 7.6% after reporting stronger results for the start of the year than analysts expected, lifted by strong demand from business fliers. Travelers slumped 7% after the insurer’s quarterly results fell short of forecasts. It had to contend with more losses from catastrophes.
The bond market has been dictating much of Wall Street’s action lately, and Treasury yields there were easing the pressure on the stock market. They’re cooling following sharp recent climbs driven by traders giving up hopes for several cuts to interest rates by the Federal Reserve this year.
The 10-year Treasury yield eased to 4.62% from 4.67% late Tuesday. The two-year yield, which moves more closely with expectations for the Fed, fell to 4.95% from 4.99%.
Yields got back to where they were in November after top officials at the Federal Reserve suggested Tuesday that the central bank may hold its main interest steady at its highest level since 2001 for a while. It wants to get more confidence that inflation is sustainably heading toward its target of 2%.
High interest rates hurt prices for investments and increase the risk of a recession, but Fed officials are concerned after a string of reports this year has shown inflation remaining hotter than forecast.
Traders are now mostly expecting just one or two cuts to interest rates from the Federal Reserve this year, according to data from CME Group. That’s down from forecasts for six or more at the start of the year.
With little help expected from an easing of interest rates in the near term, companies will need to deliver fatter profits to justify their big runs in stock price since autumn.
Omnicom Group rose 3% after reporting stronger profit for the latest quarter than analysts expected. The marketing and communications company highlighted growth trends in most markets around the world, outside the Middle East and Africa.
Eli Lilly climbed on hopes for stronger profits after it reported encouraging results from a phase 3 clinical trial for a treatment for some people with sleep apnea, a breathing disorder. It rose 1.9%.
On the losing end of Wall Street was J.B. Hunt Transport Services, which reported weaker revenue and results than expected. It was hurt in part by competition in the eastern part of the country and by higher wages for workers and other costs. It slumped 7.6%.
In stock markets abroad, London’s FTSE 100 added 0.8% after a report showed U.K. inflation fell to its lowest level in two and a half years in March. That could further pave the way for a cut in interest rates there.
Other indexes rose in Europe, while they were mixed in Asia. Japan’s Nikkei 225 fell 1.3%, while stocks jumped 2.1% in Shanghai.
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