Most U.S. stocks are falling again as concerns about high interest rates continue to compete with strong profit reports from some large companies.
NEW YORK — Most U.S. stocks were lower again on Tuesday as continued concerns about high interest rates combined with strong profit reports from some large companies.
The S&P 500 fell 0.3% in early trading, emerging from a steep decline after succumbing to pressure from rising U.S. Treasury yields. As of 9:45 a.m. ET, the Dow Jones Industrial Average was up 78 points, or 0.2%, and the Nasdaq Composite was down 0.4%.
UnitedHealth’s 5.8% gain supported the market after the company reported stronger earnings and revenue than analysts expected for the first three months of the year. Morgan Stanley was another winner, also beating expectations and rising 2.1%.
But most stocks on Wall Street were falling. PNC Financial fell 3.3% after reporting lower revenue than analysts expected. Johnson & Johnson also fell 2.2% despite reporting better-than-expected profits for its latest quarter. Sales were slightly lower than expected.
Companies are under even more pressure than usual to report higher profits and revenues, as interest rates, another measure of stock prices, are unlikely to rise significantly anytime soon.
Traders are pushing ahead with their predictions for when the Federal Reserve will start lowering its key interest rate, which is at its highest level in more than two decades. Following a series of reports showing that inflation and the broader economy remain higher than expected, the Fed will need to take longer than expected to win the final improvements needed to ease inflation to its 2% target. There are growing concerns that interest rates will need to be kept high for an extended period of time.
After spiking on Monday after last month’s better-than-expected U.S. retail sales, U.S. Treasury yields rose again following a speech by the Federal Reserve’s vice chairman.
Philip Jefferson said he expects inflation to continue to moderate and that the Fed will keep its key policy rate “at current levels.” This contrasts with his remarks in February, when he said if things went as he expected, “it would be appropriate to start reducing policy restraints at some point this year.”
Federal Reserve Chairman Jerome Powell is also scheduled to speak in the afternoon, potentially leading to further volatility in financial markets as traders lower their expectations for the number of interest rate cuts this year. Traders entered 2024 expecting the Fed to cut rates six or more times, but most are now calling for one or two cuts, according to data from CME Group.
The yield on the 10-year U.S. Treasury rose to 4.68% from 4.61% late Monday and 4.52% before the weekend.
The two-year Treasury yield, which more accurately reflects expectations for Fed action, rose to 4.96% from 4.91% late Monday.
In overseas stock markets, indexes fell in Asia and Europe following Monday’s turmoil on Wall Street. Stock indexes fell 2.1% in Hong Kong, 2.3% in Seoul and 1.4% in Paris.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
