Stocks drift as bond market pressure eases after cooler economic data – ABC4 Utah

NEW YORK (AP) – U.S. stocks are drifting Thursday on reports of mixed earnings for big companies and signals that the economy may be cooling.

The S&P 500 index lost 0.2% in morning trading, although most of the index and Wall Street stocks rose. As of 10 a.m. EST, the Dow Jones Industrial Average was down 372 points, or 1%, and the Nasdaq was down 0.3%.

Salesforce lost about a fifth of its value, and that was the main reason the Dow fell so much. The company, which helps companies manage their customers, reported weaker revenues last quarter than analysts expected, although its profit was higher than estimates. He also provided revenue forecasts for the current quarter and fiscal year that are lagging Wall Street earnings. Shares fell 19.8%.

Kohl’s fell even further – 26.3% – after reporting a surprise loss for the most recent quarter when analysts expected a profit. The retailer said sales for the quarter fell from a year earlier as customers pulled out of sales. Because of the stumble, it lowered its sales forecasts and other financial goals for the year.

The market was supported by better-than-expected earnings reports from various companies. Best Buy beat forecasts even though its sales fell below expectations last quarter and its stock rose 10.8%. Foot Locker gained 27.6% after it also posted a better-than-expected profit even though sales rose below analyst forecasts.

Stocks also broadly appreciated as Treasury yields eased in the bond market. That helped most Wall Street stocks rise, with smaller stocks in the Russell 2000 index gaining 0.8%.

The decline in yields provided relief after they rose earlier in the week on concerns about weak demand for Treasuries following several U.S. government auctions. Higher rates of return put downward pressure on all types of investments.

Yields fell on Thursday after several reports showed the U.S. economy was not as strong as expected. The hope on Wall Street is that the economy can be cooled, but not too much, so that the Federal Reserve can land precisely where high inflation can be brought under control without causing a major recession.

One report showed that more American workers than expected filed for unemployment benefits last week, although the number of layoffs remains low compared to history. Another suggested that overall growth in the U.S. economy may not have been as strong as previously thought.

A slowing economy could increase the Federal Reserve’s confidence that inflation is firmly on track to its 2% target. That, in turn, could persuade him to lower the federal funds rate, which has remained at its highest level in more than two decades.

The yield on the 10-year Treasury fell to 4.56% from 4.62% late Wednesday. The yield on two-year bonds, which more closely reflects expectations for Fed action, fell to 4.93% from 4.98%.

More important data is likely to come on Friday, when the U.S. government provides its latest monthly update of the Federal Reserve’s preferred inflation rate. According to Chris Larkin, managing director of trading and investing at E-Trade at Morgan Stanley, the report “could dominate market sentiment until the jobs report next Friday.”

Persistently high inflation earlier this year forced investors to repeatedly withhold their forecasts of interest rate cuts this year, which turned out to be too optimistic.

Until then, the main factor influencing the market will be the end of the earnings reporting season. Earnings were largely better than expected for early 2024.

Outside of Salesforce, other technology-related companies have seen warmer market reception for their latest earnings reports.

C3.ai rose 13% after the software maker beat expectations on both earnings and revenue in the latest quarter. HP gained 11.7% after beating earlier earnings forecasts.

Many retailers are also reporting, as they typically do at the end of each earnings season, and the analysis is scrutinizing due to concerns about cracks in the main engine of the U.S. economy: American household spending. Still high inflation is harmful, especially to those who earn lower incomes.

Dollar General rose 2.9% after beating earnings forecasts and beating revenue expectations in the latest quarter. The retailer, which serves many lower-income customers, said it saw a significant increase in traffic to its stores throughout the quarter.

Build-A-Bear Workshop fell 11.4%. The company, where customers can build their own stuffed animals, saw larger declines in revenue and earnings last quarter than analysts expected. The company said it faces an “overall weaker spending environment” that is hampering its business.

On foreign stock exchanges, indexes in much of Europe rose slightly after difficulties in Asia. Japan’s Nikkei 225 fell 1.3%, South Korea’s Kospi fell 1.6% and Hong Kong’s Hang Seng fell 1.3%.

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AP business writers Matt Ott and Elaine Kurtenbach contributed.