February 28th, 2024

Stock market today: Tech slumps as Alphabet and others feel the pain of high expectations

By Zimo Zhong, The Associated Press on January 31, 2024.

FILE - A street sign is seen in front of the New York Stock Exchange in New York, Tuesday, June 14, 2022. Wall Street headed lower early Tuesday, Dec. 5, 2023, after Moody's Investor Service downgraded China's sovereign debt rating as the country's real estate crisis seeps into its local government and private financing. (AP Photo/Seth Wenig, File)

NEW YORK (AP) – Technology stocks are slumping as several of Wall Street’s most influential stocks feel the downside of ultrahigh expectations. The S&P 500 was 0.5% lower early Wednesday. The Nasdaq composite fell 1%. The Dow Jones Industrial Average, which has less of an emphasis on tech, was an outlier and rose 0.3%. Alphabet fell after analysts pointed to some concerning trends in how much Google’s parent company is earning from advertising. Tesla fell after a judge struck down CEO Elon Musk’s massive pay package. The Federal Reserve announces its latest decision on interest rates in the afternoon. It’s expected to stand pat.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

HONG KONG (AP) – Global stocks were mixed Wednesday as markets awaited a decision on interest rates by the Federal Reserve, while China reported its manufacturing contracted for a fourth straight month in January.

The future for the S&P 500 lost 0.3% while that for the Dow Jones Industrial Average gained 0.1%.

Germany’s DAX was up less than 0.1%, at 16,978.72, and Britain’s FTSE 100 fell 0.1% to 7,659.31. The CAC 40 in Paris rose 0.2% to 7,684.23 after Wednesday’s survey reported France’s consumer price index fell to 3.1% in January.

In Asian trading, Japan’s Nikkei 225 added 0.6% to 36,286.71.

South Korea’s Kospi shed 0.1% to 2,497.09 after Samsung Electronics reported an annual 34% decline in operating profit for the last quarter.

Hong Kong’s Hang Seng sank 1.4% to 15,485.07, while the Shanghai Composite shed 1.5% to 2,788.55.

Official data showed China’s manufacturing purchasing managers index, or PMI, rose to 49.2 in January, up from 49.0 in December, but still below the critical 50 mark that indicates expansion rather than contraction. Weak demand in the world’s second largest economy is dragging on growth.

Australia’s S&P/ASX 200 rose 1.1% to 7,680.70 after a survey showed Australia’s inflation rate fell to a two-year low in the December quarter, with the consumer price index at 4.1%, leading to bets that the Reserve Bank may consider an interest rate cut in the next move.

India’s Sensex was 0.7% higher while Bangkok’s SET fell 0.6%.

In Wall Street, U.S. stocks drifted through a quiet Tuesday and held near their record heights following a mixed set of profit reports.

The S&P 500 slipped 0.1% from its record and the Dow gained 0.3%. The Nasdaq composite fell 0.8%.

Treasury yields were also mixed in the bond market following reports that showed the economy remains stronger than expected. One said confidence among consumers is climbing, while another suggested the job market may be warmer than forecast.

U.S. employers advertised 9 million job openings at the end of December, which was a touch more than economists expected and slightly above November’s level. Traders were expecting the data to show a cooldown in the number of openings.

A drawdown would have fit more neatly into the trend that’s carried Wall Street to a record: a slowdown in the economy’s growth strong enough to keep a lid on inflation but not so much that it will create a recession.

Hopes for a continued such trend are what have Wall Street foaming about the possibility of several cuts to interest rates by the Federal Reserve this year. Cuts would mark a sharp turnaround from the Fed’s dramatic hikes to rates over the last two years, and the reductions would give a boost to the economy and investment prices.

The Federal Reserve began its latest policy meeting on interest rates Tuesday, but virtually no one expects it to cut rates this time. That won’t stop economists and traders from parsing every word coming out of the Fed Wednesday after its meeting finishes. They’ll be searching for clues that a rate cut may arrive at its next meeting in March.

Early Wednesday, the yield on the 10-year Treasury, which is the centerpiece of the bond market, was at 4.02%, down from 4.06% late Tuesday.

In energy trading, benchmark U.S. crude lost 77 cents to $77.05 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, fell 79 cents to $81.71 per barrel.

In currency trading, the U.S. dollar slipped to 147.58 Japanese yen from 147.59 yen. The euro cost $1.0826, down from $1.0845.

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