Stan Cho, The Associated Press
10 minutes ago
FILE – Specialist James Denaro works his duties on the floor of the New York Stock Exchange, June 12, 2024. Global stock markets were mixed on Friday, June 14, 2024, after Wall Street hit new records and enthusiasm for artificial intelligence technology drove benchmarks higher. (AP Photo/Richard Drew, File)
NEW YORK (AP) — U.S. stocks were gradually clawing back from record highs on Friday as caution spread in financial markets heading into the weekend.
The S&P 500 was down 0.5% in morning trading after hitting consecutive record highs earlier this week. The Dow Jones Industrial Average was down 313 points, or 0.8%, as of 10:15 a.m. ET, while the Nasdaq Composite was down 0.2%.
Across the Atlantic, losses were more severe as European markets were reeling from the continent’s recent election results. The far-right party’s victory has increased pressure on the French president in particular, and investors worry that it could weaken the European Union, stall fiscal plans and ultimately undermine France’s ability to repay its debts. Recent elections have also rocked markets in other countries, including Mexico and India.
France’s CAC 40 index fell 2.8%, taking its weekly decline to 6.3% for its worst drop in more than two years, while Germany’s DAX index fell 1.4%.
On Wall Street, RH shares fell 17.5% after the company reported a worse loss for its latest quarter than financial analysts expected, in what the home furnishings retailer called “the toughest housing market in the last 30 years.”
Rising mortgage rates are hurting the housing market as the Federal Reserve keeps its key interest rate at its highest in more than two decades, as the central bank artificially tries to slow the economy and sap fuel for inflation through high interest rates.
Still, stocks are hitting records on growing hopes that inflation is slowing and the Federal Reserve will cut interest rates later this year, while big technology stocks continue to soar, largely unaffected by what’s happening in the economy or interest rates.
Adobe reported profits for its latest quarter that beat analysts’ expectations, sending its shares up 14.6%.
Broadcom rose 1.7%, heading for a second straight day of gains after it announced better-than-expected profits and a 10-for-1 stock split to make its shares more affordable. Nvidia, a poster child for a rapid entry into artificial intelligence technology, rose 1.9%, as its market capitalization surpasses $3 trillion and looks set to rise further.
In the bond market, Treasury yields edged lower after a preliminary report from the University of Michigan suggested U.S. consumer sentiment did not improve this month as economists had expected.
While strong spending by U.S. households is one of the main drivers of averting a recession, “somewhat increased concerns about rising prices and lower incomes led to lower ratings of personal financial situations,” said Joan Hsu, director of the Bureau of Consumer Research.
Perhaps more importantly for financial markets, U.S. consumers’ expectations of future inflation, while relatively high, appear to have changed little — an encouraging signal that the economy may be able to avoid a self-fulfilling cycle in which expectations of higher inflation spur behavior that creates even more inflation.
The yield on the 10-year Treasury note fell to 4.21% from Thursday’s close of 4.25%. It had risen to as high as 4.60% late last month before several encouraging reports on inflation.
Overseas stock markets, Asian stock indexes were mixed. Japan’s Nikkei rose 0.2 percent after the central bank kept interest rates unchanged.
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AP Business Writer Yuri Kageyama contributed.
