Stock market today: Wall Street dips amid quiet trading
By Stan Choe, The Associated Press on May 9, 2023.
NEW YORK (AP) – Wall Street edged lower following some mixed earnings reports, as stocks remain roughly where they’ve been stuck for more than a month. The S&P 500 fell 0.5% Tuesday, and the Dow Jones Industrial Average lost 56 points, or 0.2%. The Nasdaq fell 0.6%. The next big milestone for the market will be Wednesday’s report on inflation, which has come down but remains high. It could dictate the Federal Reserve’s next move on interest rates. Political leaders are also meeting in Washington Tuesday to try to avoid a default on the U.S. government’s debt. THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below. NEW YORK (AP) – Wall Street is edging lower Tuesday following some mixed earnings reports, as stocks remain roughly where they’ve been stuck for more than a month. The S&P 500 was 0.3% lower in late trading. The Dow Jones Industrial Average was down 20 points, or 0.1%, at 33,598, with a little less than an hour left in trading, while the Nasdaq composite was 0.5% lower. Paypal fell 11.8% despite reporting better profit and revenue for the latest quarter than expected. Analysts pointed to its forecast for how much profit it expects to wring out of each $1 of revenue, which may have disappointed some investors. Electric automaker Lucid Group dropped 7.2% after reporting a worse loss than expected for the latest quarter. Skyworks Solutions sank 5% after reporting profit for the first three months of the year that matched forecasts. The company’s comments about weakness in demand from China for Android phones may have frightened investors. On the winning side of Wall Street was Palantir Technologies. It soared 23.3% after reporting a stronger profit than expected and saying demand for its new artificial intelligence platform “is without precedent.” So far this earnings reporting season, which is approaching its final stretch, the majority of companies have been topping forecasts for first-quarter results. That’s largely because expectations were set quite low due to a slowing economy and high interest rates. Companies in the S&P 500 are still on track to report a second straight quarter of weaker profits from year-earlier levels. “Companies have been able to do pretty well,” said Margie Patel, senior portfolio manager at Allspring Global Investments. The better-than-feared results have given some support to Wall Street even as many other worries are weighing on it. Key among them is what will happen to the U.S. banking system, which is under stress following three high-profile bank failures since March. Hurt by much higher interest rates, smaller and mid-sized banks are scrambling to reassure everyone that their deposits are stable and that they aren’t at risk of a sudden exodus of customers. Stocks of regional banks under the heaviest scrutiny by Wall Street were shaky on Tuesday. PacWest Bancorp rose 5.8% after shaking off an early loss. Western Alliance Bancorp climbed 2.3% after also swinging from a loss to a gain. The next big milestone for the market will be Wednesday’s report on inflation at the consumer level. Inflation has come down from its peak last summer, but it’s remaining stubbornly high. That’s raised uncertainty about what the Federal Reserve’s next move will be. The central bank has already yanked its benchmark interest rates to a range of 5% to 5.25%, up from from virtually zero early last year. High rates can undercut inflation, but only by smothering the economy and hurting investment prices bluntly. Many investors are preparing for a recession to hit later this year because of much higher rates, as well as the potential for banks to pull back on lending because of the industry’s troubles. Even though the job market has remained resilient and the unemployment rate is remarkably low, other areas of the economy have shown more weakness like manufacturing. “It seems that although they have more data and information than anybody, the Fed seems myopically focused on the inflation rate and unemployment rate rather than looking at the big picture,” Allspring’s Patel said. “What does the person on the street see? I think they see a lot more things to be concerned about than the Fed.” She is hopeful that stocks can have positive returns this year, but she’s quick to say that’s not an expectation. “I want to be optimistic, but when you look at the facts, you have to temper that quite a bit,” she said. Worries about a recession and expectations for possible cuts in rates by the Fed have caused yields to pull back since early March. Also looming over the market is a June 1 deadline. That’s when the U.S. government could potentially run out of cash to pay its bills unless Congress allows it to borrow more. The widespread expectations is for Congress to come to a deal before that deadline because the alternative would be severe damage to the economy and financial markets. But each day that passes without a deal threatens to raise concerns. President Joe Biden will meet with leaders from Congress after U.S. stock markets close for trading Tuesday. Worries about weakening demand sent crude oil slipping. Stocks also dropped in Shanghai, down 2.1%, after a report showed that imports to China slumped sharply last month. In the bond market, the 10-year Treasury yield rose to 3.52% from 3.51% late Monday. The two-year Treasury yield, which moves more on expectations for the Fed, rose to 4.01% from 4.00%. ___ AP Business Writers Yuri Kageyama and Matt Ott contributed. 27-26
