NEW YORK (AP) โ Wall Street on Friday closed its 10th winning week in the last 11 with a mixed finish after an encouraging inflation report.
The S&P 500 rose 0.1% after earnings season began with mixed results from Delta Air Lines, JPMorgan Chase and others. The Dow Jones Industrial Average fell 118 points, or 0.3%, dragged down by a sharp loss from UnitedHealth Group following its results. The Nasdaq was basically flat and rose less than 0.1%.
Stocks have been hitting records for months, bringing the S&P 500 to within 0.3% of its all-time high, on hopes that inflation is cooling enough for the Federal Reserve to cut interest rates several times this year. anus.
Treasury yields have already plunged in the bond market on those expectations, and fell further after a report showed U.S. wholesale inflation was weaker last month than economists expected. . The data reinforced expectations for rate cuts a day after another report showed consumer inflation was warmer than expected.
The 10-year Treasury yield fell to 3.94% from nearly 4% just before the report was released. In October, it was above 5% and at its highest level since 2007. More flexible rates and yields ease pressure on the economy and financial system, while raising investment prices.
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 six or more times through 2024. It would be a much more aggressive path than the Fed itself has hinted at. It has even warned that it 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 slew of reports from banks.
JPMorgan Chase fell 0.7% after reporting weaker-than-expected results for the final three months of 2023.
UnitedHealth Group fell 3.4% despite beating analysts' profit forecasts. The healthcare giant's medical costs have skyrocketed, worrying investors.
Delta Air Lines sank 9% even though it reported higher profits and revenue for the final three months of 2023 than analysts had forecast. The airline's forecast range for next full-year profit indicated it could fall below what analysts expected.
The airline and other travel-related companies were also hit by rising oil prices, which put pressure on their fuel costs. United Airlines fell 10.6% and Norwegian Cruise Line Holdings lost 4.3%.
Crude oil prices rose on concerns about potential supply disruptions after Yemen's Houthi rebels vowed fierce retaliation for US and UK attacks on them. A barrel of benchmark U.S. crude oil rose 66 cents to $72.68. Brent crude, the international standard, rose 88 cents to $78.29 a barrel.
That helped energy stocks lead the S&P 500 with an overall gain of 1.3%. Valero Energy rose 2.8% and Marathon Oil rose 2%.
In total, the S&P 500 rose 3.59 points to 4,783.83. The Dow Jones fell 118.04 to 37,592.98 and the Nasdaq composite gained 2.57 to 14,972.76.
In foreign stock markets, Japan's Nikkei 225 rose 1.5% to cap a strong week 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 in Europe.
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AP Business writers Matt Ott and Elaine Kurtenbach contributed.
