NEW YORK (AP) โ Stocks are adrift on a busy Friday with many crosscurrents sweeping Wall Street. Oil prices are rising, while bond yields are falling.
The S&P 500 was virtually unchanged in afternoon trading, still within 0.3% of its all-time high set two years ago, as the earnings reporting season began with mixed results of Delta AirlinesJPMorgan Chase and Wells Fargo.
The Dow Jones Industrial Average was down 149 points, or 0.4%, as of 1:10 p.m. ET, and the Nasdaq composite was basically flat.
Some of the strongest action came in the oil market, where crude oil prices rose on concerns about possible interruptions in supply before cutting their profits a little. The benchmark US oil barrel rose 0.9% after Yemen's Houthi rebels vowed fierce retaliation for US and UK attacks against them. Brent crude, the international standard, rose 1.1%.
In the bond market, yields plunged after a report showed Inflation at the US wholesale level was weaker. last month than economists expected. This followed a report the previous day showing inflation at the consumer level was warmer than expected.
Friday's report reassured Wall Street and reinforced confidence that inflation is cooling enough for the Federal Reserve to cut interest rates several times this year. Rate cuts ease pressure on the economy and financial system, while increasing investment prices. And Treasury yields have already plunged since the fall on expectations of upcoming rate cuts.
The 10-year Treasury yield fell to 3.98% from 3.99% just before the report was released. When it was above 5% in October, it was at its highest level since 2007 and put strong downward pressure on the stock market.
The two-year Treasury yield, which more closely tracks the Federal Reserve's expectations, fell to 4.17% from 4.27% before the release of the wholesale inflation report. Traders rebuilt bets that the Federal Reserve will begin cutting interest rates in March, according to data from CME Group.
Traders are largely betting on the Federal Reserve to cut its main interest rate at least six times through 2024. It would be a much more aggressive path than the Fed itself has hinted at. Federal Reserve officials have even warned that they could raise rates further if inflation refuses to budge convincingly toward its 2% target. The federal funds rate is already at its highest level since 2001.
"The danger of Fed fine-tuning is that they could be fiddling while the economy is burning," said Brian Jacobsen, chief economist at Annex Wealth Management. โIf they rely on data, that means they are looking in the rearview mirror. Now they need to look forward through the windshield.โ
Interest rates are one of the main levers that determine where stock prices are. The other is how much profit companies are making, and analysts expect the S&P 500 to post a second straight quarter of growth after previously faltering under the weight of high inflation.
The reporting season for the end of 2023 unofficially began on Friday with a group of bank reports.
Bank of America fell 1.2% after its earnings for the final three months of 2023 missed analyst estimates. Wells Fargo lost 3.2% after roughly matching analyst expectations, while JPMorgan Chase was nearly flat after reporting weaker-than-expected results.
UnitedHealth Group fell 3.8% despite beating analysts' profit forecasts. The healthcare giant's medical costs have skyrocketed, worrying investors.
Delta Air Lines sank 8.4% even though it reported higher profits and revenue for the final three months of 2023 than analysts had forecast. The airline gave a forecast range indicating its upcoming full-year profits could be below what analysts expected.
The airline and other travel-related companies have also been hit by rising oil prices, which are putting pressure on their fuel costs. United Airlines fell 9.7% and Norwegian Cruise Line Holdings lost 3.8%.
Meanwhile, energy stocks led the S&P 500 with an overall gain of 0.9%. Valero Energy rose 1.9% and Marathon Oil rose 1.5%.
In overseas stock markets, Japan's Nikkei 225 rose 1.5% to cap a week of strong gains that took it to levels not seen since 1990, when the country's economic bubble was beginning to deflate. Rates were lower in much of the rest of Asia but higher across Europe.
AP Business writers Matt Ott and Elaine Kurtenbach contributed.
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