NEW YORK (AP) — U.S. stocks were mixed on Tuesday after reports of a cooling job market raised the prospect of an interest rate cut that Wall Street wants.
The S&P 500 was down 0.2% in afternoon trading. The Dow Jones Industrial Average was up 4 points, or less than 0.1%, as of 12:50 p.m. Eastern time, and the Nasdaq Composite was down 0.1%.
Movement picked up in bond markets, with Treasury yields falling after it was reported that U.S. employers advertised fewer job openings at the end of April than economists had expected.
Jobs in the United States Payrolls fell to their lowest level since 2021 in April but remained at a historically high level. The drop surprised economists who had expected a slight increase in job openings. A strong job market has supported consumer spending and the overall economy amid pressures from inflation and high interest rates.
Wall Street actually wants the economy to slow down because it could tame inflation and persuade the Federal Reserve to cut interest rates, easing pressures on financial markets. The question is whether the slowdown will be too great and lead to a painful recession.
Treasury yields fell earlier in the week after U.S. manufacturing activity on Monday contracted for the 18th time in 19 months in May, tipping the balance toward a rate cut. But the weak data also raised concerns about profits for the companies most dependent on a strong economy.
Oil prices in particular have fallen on concerns that a slowing economy will slow growth in fuel demand. U.S. crude fell 1.3% a barrel on Tuesday, taking its decline this week to more than 5%. Brent crude, the international standard, fell 1.1%.
That led oil and gas stocks to post the market’s worst losses for a second straight day, with Exxon Mobil Corp. falling 2.2% and Diamondback Energy Inc. dropping 2.1%.
These companies are often called “cyclical” because their profits tend to rise and fall with the business cycle. But manufacturing data “may be more noise than signal,” say Barclays strategists Anshul Gupta and Stefano Pasquale. Over the past two years, the relationship between manufacturing data surprises and the relative performance of cyclical stocks versus the broader market has broken down, they say.
Meanwhile, on Wall Street, Bath & Body Works shares fell 12.4 percent even though the company reported better-than-expected sales and profits in its latest quarter.
Designer Brands, which owns the Designer Shoe Warehouse chain of stores, saw its shares fall 21.7% after first-quarter profit fell short of analysts’ expectations.
GameStop also gave up some of the big gains from the previous day, falling 4.6%, after euphoria spread after a key figure in the stock’s 2021 surge said he had acquired a stake in the video game retailer.
Gains on Wall Street were driven by shares of companies that stand to benefit if oil prices continue to fall. Trucking company Old Dominion Freight Line rose 3.1%, the biggest gainer in the S&P 500. Cruise ship operator Carnival Inc rose 4.6%, and American Airlines Group Inc added 0.5%.
In the bond market, the yield on the 10-year Treasury note fell to 4.33% from Monday’s close of 4.39% and Friday’s close of 4.50%. It was recently above 4.60%.
The yield on the two-year note, which more accurately reflects the Fed’s expectations, fell to 4.77% from 4.81%.
In overseas stock markets, India’s Sensex index fell 5.7 percent from the previous day after rising 3.4 percent after the country’s election.
Indexes in other Asian countries were mixed, while most European countries saw declines.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
