Stan Cho, The Associated Press
23 minutes ago
The New York Stock Exchange on Tuesday, June 18, 2024. Stocks in Europe and Asia are mostly higher after U.S. stocks hit record highs and rally in technology companies lifted stock indexes. (AP/Peter Morgan)
NEW YORK (AP) — U.S. stocks were hovering near record highs Tuesday after the latest signs that economic growth may be slowing without plummeting as expected.
The S&P 500 was up 0.2% after hitting its 30th record this year. The Dow Jones Industrial Average was up 85 points, or 0.2%, as of 9:50 a.m. Eastern time, while the Nasdaq Composite was down 0.1%.
Stocks rose slightly as yields in the bond market fell. Treasury yields fell after the U.S. Securities and Exchange Commission reported that sales at U.S. retailers rose last month but still fell short of economists’ expectations.
That could be an encouraging signal to the Federal Reserve, which is trying to pull off a tough rebalancing of the economy. The Fed wants to keep interest rates high enough to slow the economy down enough to keep inflation in check, and is hoping to cut its key interest rate, which is at a 20-year high, just before it slides into a painful recession.
The retail sales figures have boosted traders’ expectations that the Federal Reserve will cut interest rates at least once and possibly twice this year, according to CME Group data, and Fed officials themselves are broadly on track to cut rates once or twice in 2024.
The yield on the 10-year Treasury note fell to 4.24% from Monday’s close of 4.29%. The yield on the two-year note, which more accurately reflects the Fed’s expectations, fell even further, to 4.71% from 4.77%.
Of course, Tuesday’s weaker-than-expected data could also be a warning signal that household spending, the main driver of the U.S. economy, is collapsing.
Although inflation has slowed from its peak, it remains high, with low-income households in particular struggling to keep up with rising prices.
Homebuilder Lennar Inc. fell 1.9% after co-CEO Stuart Miller said “weaker consumer sentiment” and fluctuating interest rates were challenging the company. Shares fell even though the company reported profits for its latest quarter that beat analysts’ expectations.
Shares of electric car maker Fisker fell nearly 60% to 2 cents a share after the company filed for Chapter 11 bankruptcy protection, citing “a variety of market and macroeconomic headwinds.”
Among the gainers was Ray Ze Boy, whose shares rose 19.9% after the company reported better-than-expected profits and sales for its most recent quarter. The furniture maker said it got off to a strong start in the current quarter, helped by a strong Memorial Day sale, despite high interest rates suppressing home sales across the economy.
SilkRoad Medical shares rose 23.7% after Boston Scientific agreed to buy the medical device maker in an all-cash deal valuing the deal at about $1.26 billion, including cash. Boston Scientific shares fell 0.4%.
Abroad, European stock indexes continue to recover after crashing last week, when the surprise victory of a far-right party in an election that raised concerns about a possible rise in the government’s debt burden, particularly in France.
France’s CAC 40 rose 0.7%, heading for a second consecutive weekly gain.
In Asia, Japan’s Nikkei stock average rose 1 percent, with major automaker Toyota Motor Corp. rising after shareholders rejected a proposal to force Akio Toyoda, the grandson of the company’s founder, to step down from his role as chairman.
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AP Business Writer Elaine Kurtenbach contributed.
