Stock market today: Wall Street rises to regain momentum after last week’s lull
By Stan Choe, The Associated Press on August 7, 2023.
NEW YORK (AP) – Stocks closed higher as Wall Street regained momentum after its big rally for the year took a pause last week. The S&P 500 rose 0.9% Monday to recover more than a third of its loss from last week. That was its first losing week in the last four. The Dow added 407 points, or 1.2% and the Nasdaq rose 0.6%. Berkshire Hathaway rose after the company run by Warren Buffett reported stronger results than analysts expected. Besides profit reports from media giants like The Walt Disney Co. and Fox, this week will also offer some highly anticipated reports on inflation. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below. NEW YORK (AP) – Stocks are climbing Monday as Wall Street regains momentum following a pause in its big rally for the year so far. The S&P 500 was 0.8% higher in late trading to recover about a third of its loss from last week. That was its first losing week in four and just its third in the last 12. The Dow Jones Industrial Average was up 404 points, or 1.2%, at 35,469, as of 3 p.m. Eastern time. The Nasdaq composite was 0.4% higher. Berkshire Hathaway rose 3.9% and was a major force lifting the market after the company run by famed investor Warren Buffett reported stronger profit and revenue for the spring than analysts expected. Pharmaceutical company Viatris also rose after its results topped forecasts. Viatris’s stock climbed 4.1%. The stronger-than-expected reports helped offset a 5.1% drop for Tyson. The company’s results for the latest quarter fell far short of analysts’ expectations, and Tyson said it would close four chicken facilities as it tries to cut costs. Tesla also weighed on the market with a 1.4% drop. The electric vehicle maker said its chief financial officer, Zachary Kirkhorn, stepped down last week after four years in the position. Corporate profits have been mostly beating forecasts as the season for reporting results from April through June enters its tail end. Nearly four out of five companies in the S&P 500 have topped expectations so far, according to FactSet. But they’re still on track to report their sharpest drop in profit since the summer of 2020, when the pandemic was pummeling the global economy. Besides profit reports from some media giants like The Walt Disney Co. and Fox, this upcoming week also features highly anticipated reports on inflation. Inflation has been the key to Wall Street’s big moves in recent years after soaring to its worst level in generation. Since hitting a peak last summer, inflation has been cooling steadily. That has raised hopes the Federal Reserve may be done with its drastic hikes to interest rates. Higher rates try to smother inflation by bluntly slowing the entire economy and hurting prices for investments. The Fed has quickly pulled its federal funds rate to the highest level in more than two decades, up from virtually zero early last year. Inflation has come down from more than 9% last summer to 3% in June. But many economists and professional investors say the toughest part may still be ahead as the Fed tries to get inflation down toward its 2% target. Sticky inflation could mean Wall Street latched too quickly onto the growing hope that rate hikes are over and the economy will have a soft landing. If that’s the case, the S&P 500’s rally of 19.5% through the year’s first seven months could also be overdone, as critics suggest. Some recent earnings reports may be hinting at the still-existing risk of a mild recession, as all the Fed’s past rate hikes make their way through the system, according to Amanda Agati, chief investment officer for PNC Financial Services Asset Management Group. She points to Chipotle, Starbucks and Apple, which all reported revenue either below or right at analysts’ expectations for the spring. They’re “very much a part of the daily life of upper middle-income consumers. Yet their sales were weak.” Oil prices have perked up recently. The price of a barrel of U.S. crude added roughly $10 through July to top $80, though it slipped 88 cents to $81.94 Monday. A remarkably resilient job market may also be putting a floor under inflation by giving households fuel to keep spending and keep inflationary forces alive. A report last week showed that wages for workers rose more in July than expected, though hiring was cooler than forecast. On Thursday, the U.S. government will release the latest monthly update on inflation that consumers are feeling, and economists are forecasting it will show a 3.3% rise in prices from year-ago levels. That would be an acceleration from June’s inflation rate. The Fed pays particularly close attention to what prices are doing for services outside of rent and housing. Much of the improvement there during June came from falling airfares. Now that they’re back to where they were before the pandemic, they may not move much, economists at Deutsche Bank say. In stock markets abroad, indexes were mixed across Europe and Asia. In the bond market, yields were ticking higher after jumping last week and putting pressure on the stock market. The yield on the 10-year Treasury rose to 4.07% from 4.04% late Friday. It helps set rates for mortgages and other important loans. The two-year Treasury yield, which moves more on expectations for the Fed, rose to 4.77% from 4.76%. ___ AP Business Writers Yuri Kageyama and Matt Ott contributed. 26-25
