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Financial Markets 01/24 15:55
NEW YORK (AP) -- U.S. stocks pulled back from their all-time high on Friday
as they closed out a second straight winning week.
The S&P 500 slipped 0.3% a day after setting a record. The Dow Jones
Industrial Average dipped 140 points, or 0.3%, and the Nasdaq composite sank
0.5%.
Trading was quiet through the day, aided by relative steadiness in the bond
market, which has been driving much of the action on Wall Street lately. When
worries about inflation and the U.S. government's swelling debt have been on
the rise, Treasury yields have climbed and helped knock down stock prices. When
concerns ebb, such as after last week's encouraging update on inflation, yields
have eased and helped stocks rise.
A mostly encouraging start to the earnings reporting season for big U.S.
companies has also helped prop up the stock market. Even if higher Treasury
yields are pushing downward on their stock prices, companies can make up for it
by delivering bigger profits.
"If 2024 was the year of the election, 2025 is the year of earnings,"
according to Brian Jacobsen, chief economist at Annex Wealth Management.
"Earnings have been fundamentally improving, but how long can that last and how
much can they rise?"
Texas Instruments fell 7.5% despite reporting profit for the latest quarter
that topped analysts' expectations.
In a sign of how much pressure is on companies to keep growing, analysts
focused on discouraging signals of how much profit the company is likely to
make from each $1 of revenue during the first three months of 2025. That helped
drag down stocks across the semiconductor industry.
CSX sank 2.9% even though the railroad delivered a profit for the latest
quarter that matched analysts' expectations. Its revenue for the last three
months of 2024 just missed analysts' forecasts as it dealt with the effects of
hurricanes.
On the winning side of Wall Street were Novo Nordisk's U.S.-listed shares,
which jumped 8.5%. The Danish company reported results from a clinical trial of
a treatment for people who are overweight or obese, which could mean bigger
profits in the future.
NextEra Energy climbed 5.2% after the owner of the Florida Power & Light
utility reported profit for the latest quarter that was slightly above
expectations. CEO John Ketchum said his company is benefiting from increased
demand for electricity.
Verizon Communications rose 0.9%. It delivered results for the latest
quarter that edged past analysts' expectations, benefiting in part from price
increases imposed in recent quarters, and unveiled a strategy to help
businesses use artificial intelligence.
All told, the S&P 500 fell 17.47 points to 6,101.24. The Dow Jones
Industrial Average dropped 140.82 to 44,424.25, and the Nasdaq composite sank
99.38 to 19,954.30.
In the bond market, the yield on the 10-year Treasury eased to 4.61% from
4.65% late Thursday. Other yields also pulled lower following a couple reports
on the U.S. economy that came in worse than expected.
One said sentiment among U.S. consumers is weaker than economists had
forecast and fell in January for the first time in six months. The drops were
widespread, carrying across incomes, wealth and age groups, according to Joanne
Hsu, director of the Surveys of Consumers at the University of Michigan.
A separate preliminary report suggested U.S. business activity is also
weaker than expected, with its growth slowing. A third, potentially more
encouraging report said sales of previously occupied homes were slightly
stronger last month than expected. That capped the weakest year for such sales
since 1995.
Traders don't expect the weak data to push the Federal Reserve to cut its
main interest rate at its meeting next week. They're virtually certain the
central bank will hold steady, according to data from CME Group.
If they're correct, it would be the first meeting the Fed has done so since
it began lowering the federal funds rate in September to take pressure off the
U.S. economy. Lower rates can goose prices for investments, but they can also
give inflation more fuel. And worries have been rising about stubborn
inflation, as well as the effects of potential tariffs and other policies
championed by President Donald Trump.
In stock markets abroad, indexes were mixed across Europe and Asia.
Tokyo's Nikkei 225 edged down by 0.1% after the Bank of Japan raised its
benchmark interest rate to about 0.5% from 0.25%, as was widely expected. It is
the highest level for the rate since 2008, as the Bank of Japan shifts out of a
long spell of extreme low interest rates meant to spur more borrowing and
spending.
Stocks jumped 1.9% in Hong Kong and 0.7% in Shanghai for some of the bigger
moves in global markets.
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AP Writers Matt Ott and Zimo Zhong contributed.
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