NEW YORK (AP) — U.S. stocks were falling Thursday after mixed profit reports from major companies and signs the economy may be cooling.
The S&P 500 was down 0.3% in midday trading, but most stocks within the index and across Wall Street were higher: The Dow Jones Industrial Average was down 329 points, or 0.9%, as of 12:12 pm Eastern time, and the Nasdaq Composite was down 0.5%.
Salesforce was the main reason the Dow Jones Industrial Average fell more than the broader market, with its shares falling by about a fifth. The company, which helps businesses manage their customer relationships, reported earnings for its most recent quarter that were lower than analysts expected. It also missed Wall Street’s expectations for revenue guidance for the current quarter and fiscal year. The stock fell 19.9%.
Kohl’s shares slumped further after the company reported an unexpected loss for its latest quarter, falling 24.1 percent even though analysts had expected a profit. The company said quarterly sales fell compared with the same period a year ago as customers cut back on clearance purchases. The slump led the company to lower its forecast for sales and other financial targets for the year.
Better-than-expected profit reports from a range of companies supported the market. Best Buy beats expectations The stock rose 11.6% despite the company’s weaker-than-expected sales last quarter. Foot Locker also rose 18.7% after reporting better-than-expected profits, even as sales fell short of analysts’ forecasts.
The stock market also broadly rose as Treasury yields fell in the bond market, helping lift most stocks on Wall Street and helping the Russell 2000 index of small-cap stocks rise 1.2%.
The drop in yields was a relief after several U.S. government bond auctions earlier this week sent Treasury yields higher on concerns that demand for government debt was weak. Higher yields put downward pressure on all kinds of investments.
Yields fell Thursday after several reports showed the U.S. economy was not as strong as expected. Wall Street is hoping that the economy will slow, but not slow too much, and that the Federal Reserve can hit the sweet spot of being able to tame high inflation without causing a deep recession.
According to one report: More U.S. workers filing for unemployment benefits Last week’s number of layoffs was higher than expected, but still low compared to past years. Overall growth in the U.S. economy It may not be as powerful as previously thought.
A slowdown in the economy could give the Fed more confidence that inflation is falling sustainably toward its 2% target. Lower the federal funds rateIt is the highest level in more than 20 years.
The yield on the 10-year Treasury note fell to 4.54% from Wednesday’s close of 4.62%. The yield on the two-year note, which better reflects expectations of Fed action, fell to 4.92% from 4.98%.
The more significant data is likely to be released on Friday, when the government releases the latest monthly data on the Federal Reserve’s preferred inflation gauge. That report “could sway market sentiment until next Friday’s jobs report,” said Chris Larkin, managing director of trading and investments at Morgan Stanley E-Trade.
High inflation early this year forced investors to repeatedly postpone their expectations of rate cuts this year. Too optimistic.
Until then, the end of earnings season could be the main driver of the market, with earnings forecasts for early 2024 coming in ahead of expectations.
Outside of Salesforce, other technology companies’ latest earnings reports were received more favorably by the market.
C3.ai rose 16.4% after beating expectations on both profit and revenue in its latest quarter, while HP rose 17.8% after its profit beat expectations slightly.
Many retailers are also reporting financial results as usual at the end of the earnings season, drawing intense scrutiny over worries that they could be showing cracks in U.S. household spending, the main engine of the U.S. economy, hurt by still-high inflation. Especially low-income earners.
Dollar General wavered between a profit and a loss after beating profit expectations and reporting slightly better-than-expected sales in its latest quarter. The retailer, which caters to a largely low-income customer base, said it saw a strong increase in store traffic throughout the quarter. Sales had recently fallen 4.3%.
Build-A-Bear Workshop Inc., which lets customers build their own stuffed toys, fell 13.4% after the company reported weaker revenue and performance in its latest quarter than analysts expected. The company said it was dealing with an overall “weaker spending environment” that was weighing on its business.
Overseas stock market indexes in many European countries rose slightly after weakening in Asia. Japan’s Nikkei fell 1.3%, South Korea’s KOSPI fell 1.6% and Hong Kong’s Hang Seng Index fell 1.3%.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
