NEW YORK (AP) – Wall Street fell on Tuesday after a lackluster resumption of trading after a three-day holiday.
The S&P 500 fell 17.85 points, or 0.4%, to 4,765.98. The Dow Jones Industrial Average fell $231.86, or 0.6%, to $37,361.12, and the Nasdaq Composite Index fell $28.41, or 0.2%, to $14,944.35.
Spirit Airlines loses 47.1% due to US judge ruling Blocking acquisition by JetBlue Airways There are also concerns that airfares will become more expensive. JetBlue rose 4.9%.
Meanwhile, bank stocks were mixed as earnings season gets into full swing for the final three months of 2023. Morgan Stanley fell 4.2% after the company said legal issues and a special assessment reduced its pre-tax profit by $535 million. goldman sachs The stock rose 0.7% after the company reported results that beat Wall Street expectations.
If Wall Street analysts' predictions are to be believed, fourth-quarter profits for S&P 500 companies could increase only slightly, if at all, from a year ago. Earnings have been under pressure for more than a year due to rising costs due to high inflation.
However, there is a lot of optimism for 2024, with analysts predicting a strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. Combined with expectations that the Federal Reserve will cut interest rates several times this year, the S&P 500 index has risen for 10 of the past 11 weeks. The index remains within 0.6% of its all-time high reached two years ago.
In the bond market, U.S. Treasury yields have already fallen on expectations for a rate cut, with traders saying they could see rate cuts begin as early as March. This is a sharp turnaround from years past, when the Federal Reserve raised interest rates significantly in hopes of curbing high inflation.
Easing interest rates and yields eases pressure on the economy and financial system, while also boosting investment prices. And over the past six months, interest rates have been the main force moving the stock market, according to Morgan Stanley strategist Michael Wilson.
He believes this momentum will continue in the short term, with “bond markets still in charge.”
For now, traders are planning to cut interest rates much more by 2024 than the Fed itself has indicated. As a result, there is a growing possibility that the market will fluctuate significantly every time there is a speech or economic report from Fed officials.
Yields rose in the bond market Federal Reserve President Christopher Waller said: In his speech, he said that “policies are set appropriately” regarding interest rates. After the speech, traders increasingly believed the Fed's first rate cut would occur in May rather than March.
Waller said the cooling in the statistical reporting has made him “more confident than ever since 2021 that inflation is trending downward toward the Fed's 2% target,” adding, “I'm confident that inflation will not occur.” “If not, the central bank should cut interest rates this year.” Rebound and stay high. ”
But Waller said the economy is doing well until then, so the Fed can wait and monitor future data before taking any next action. “You can take your time and make sure this is done correctly,” he said.
The yield on the 10-year U.S. Treasury rose to 4.06% from 3.95% late Friday, increasing pressure on the stock market. Rising yields could weigh on corporate profits, among other negative factors for investors, but the 10-year Treasury yield remains well below the 5% level reached in October.
On Wall Street, Boeing Co. was one of the biggest decliners in the market as concerns continued. Trouble occurs on 737 Max 9 aircraft In response to the recent explosion on board an Alaska Airlines passenger plane. Boeing fell 7.9%.
Those on the winning side were Carroll's Restaurant Group, Burger King's largest franchisee In the US, it rose 12.5%. Restaurant Brands International announced that it will purchase all of the shares of Carroll's it does not already own for $9.55 per share in cash.
Most overseas stock markets fell, including the Japanese market, which had been on a winning streak and hit a new high since the bursting of the bubble in 1990.
The Nikkei 225 index fell 0.8% as the value of the Japanese yen rose against other currencies. The strong yen could weigh on profits for Japan's exporters, rising on expectations that the Bank of Japan is preparing to lift its long-standing policy of keeping interest rates below zero.
AP Business Writers Matt Ott and Elaine Kurtenbach contributed.