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Financial Markets 10/22 15:23
NEW YORK (AP) -- U.S. stock indexes barely budged after a quiet day of mixed
trading on Tuesday.
The S&P 500 edged down by less than 0.1%. It was a tiny loss, but it still
marked the first back-to-back drop for the index in a month and a half. The
index fell modestly on Monday after coming off a sixth straight winning week,
its longest such streak of the year.
The Dow Jones Industrial Average slipped 6 points, or less than 0.1%. Like
the S&P 500, it's been on a long, record-breaking rally and set its all-time
high on Friday. The Nasdaq composite rose 0.2%.
General Motors jumped 10.4% for its best day since 2020 after delivering
stronger profit and revenue for the latest quarter than analysts expected. It
benefited from stronger sales to individual U.S. customers, even as sales
slowed to large fleet buyers.
Philip Morris International was another one of the strongest forces pushing
upward on the S&P 500 and rallied 10.5% after topping forecasts for both profit
and revenue. CEO Jacek Olczak said the company is seeing momentum across
regions and business lines, including growth for both its smoke-free business
and for its combustible cigarettes.
Norfolk Southern climbed 4.9% after the railroad topped analysts' forecasts
for profit.
Keeping indexes in check was GE Aerospace, which tumbled 9% and was the
heaviest weight on the S&P 500. The company, which began trading independently
this spring after splitting off from the former conglomerate General Electric,
reported stronger profit for the latest quarter than analysts expected, but its
revenue fell short of forecasts.
Verizon Communications sank 5% after likewise reporting weaker revenue for
the latest quarter than expected, even though its profit edged past forecasts.
Genuine Parts, which sells automotive and industrial replacement parts,
dropped 21% for the largest loss in the S&P 500 after its profit for the latest
quarter fell well short of expectations. CEO Will Stengel said much of the
shortfall was due to continued weakness in Europe and its industrial business.
Sherwin-Williams sank 5.3% after both its profit and revenue came in weaker
than analysts expected. CEO Heidi Petz cited a "tough macroeconomic
environment" and "continued choppiness in the demand environment" for its
paints and coatings. Demand from do-it-yourself customers in North America
remains weak given the higher debt levels that they're carrying and
still-lingering inflation.
All told, the S&P 500 slipped 2.78 points to 5,851.20. The Dow dipped 6.71
to 42,924.89, and the Nasdaq composite rose 33.12 to 18,573.13.
Stocks have slowed their record-breaking momentum this week under increasing
pressure from rising Treasury yields in the bond market.
The yield on the 10-year Treasury held steady at 4.20%, where it was late
Monday. That's well above the 4.08% level it was at just on Friday. Higher
yields for Treasurys can make investors less willing to pay high prices for
stocks, which critics say already look too expensive.
Treasury yields have been climbing following a raft of reports showing the
U.S. economy remains stronger than expected. That's good news for Wall Street,
because it bolsters hopes that the economy can escape from the worst inflation
in generations without the painful recession that many had worried was
inevitable.
"What appears to be unfolding before our eyes is a soft-landing scenario
only the most optimistic dream of," according to Gregory Daco, EY chief
economist.
But it also is forcing traders on Wall Street to ratchet back expectations
for how much the Federal Reserve will cut interest rates. The central bank has
made the drastic shift to lowering interest rates in hopes of keeping the
economy strong, but a more resilient-than-expected economy wouldn't need as
much help.
Traders are now largely expecting the Fed to cut its main interest rate by
half a percentage point more through the end of the year, according to data
from CME Group. A month ago, some of those same traders were betting on the
federal funds rate ending the year as much as half a percentage point lower
than that.
In stock markets abroad, European indexes were modestly lower despite German
software giant SAP nudging past profit expectations. In Asia, Japan's Nikkei
225 dropped 1.4%, and South Korea's Kospi fell 1.3%, but indexes were more
resilient in China.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
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