The index has recently risen to record highs, largely due to expectations that the Federal Reserve will cut interest rates this year as inflation is expected to subside. The market was also boosted by an increasing number of reports showing that major U.S. companies were making better-than-expected profits.
Macy’s joined the chorus of companies whose latest quarterly profits beat analysts’ expectations, sending the company’s stock up 5.1% after some early volatility. The company, which also operates Bloomingdale’s in addition to its namesake store, raised the lower bounds on its future sales and profit forecasts.
Lam Research also helped support the market after suppliers to the semiconductor industry announced stock buyback programs worth up to $10 billion. The company said it will conduct a 10-for-1 stock split to lower the price of each share and make it more affordable to more investors. The company’s stock price rose 2.3%.
This offset a 3.7% decline in Palo Alto Networks. The cybersecurity company submitted a better-than-expected earnings report, but it also laid out a range of revenue estimates for the current quarter, with the midpoint slightly below analysts’ expectations.
Trump Media & Technology Group, which operates the Donald Trump Truth social network, fell 8.7% after it disclosed a net loss of $327.6 million in its first quarterly report as a publicly traded company.
Lowe’s fell 1.9% despite reporting better results for the latest quarter than analysts had feared. The company said it maintained its earnings forecast for this year, with key underlying sales down by up to 3% as high interest rates constrain customer movement.
Interest rates on mortgages, credit cards and other payments are rising as the Federal Reserve keeps key interest rates at the highest levels in more than 20 years. The government is trying to walk the tightrope of squeezing the economy through high interest rates high enough to quell high inflation, but not so high as to cause a painful recession.
After a dismal start to the year, an encouraging report last week showing that inflation may finally be moving in the right direction has raised hopes that such a “soft landing” for the economy might be possible — and that the Federal Reserve may cut its key interest rate one or two times this year.
A senior Federal Reserve official, Christopher Waller, said in a speech on Tuesday that he expected economic data to moderate following recently released weaker-than-expected reports on U.S. retail sales and strength in the U.S. services sector. He said there was. This, in turn, will put downward pressure on inflation.
But he said unless the job market weakens significantly by then, “we need to see a few more months of good inflation data to feel comfortable supporting an easing monetary policy stance.”
Expectations of future interest rate cuts led to lower U.S. Treasury yields, easing pressure on the stock market. The yield on the 10-year U.S. Treasury note fell to 4.41% from 4.48% late Monday. The yield on the two-year Treasury note, which more accurately reflects expectations for Fed policy, fell to 4.83% from 4.85%.
There haven’t been many strong economic reports this week, and the biggest potential for a market rally will be upcoming earnings reports.
This week’s headliner is Nvidia, whose stock price has soared amid excitement over its artificial intelligence technology. The company is scheduled to release its latest quarterly results on Wednesday, and expectations are high.
Target will also report on Wednesday, with Ross Stores following on Thursday. It could provide more information about how well U.S. households’ spending is holding up. As inflation remains high, the pressure on them is increasing, with lower-income customers appearing to be under the greatest pressure.
In overseas stock markets, indexes fell in most of Europe and Asia.
Stocks fell 2.1% in Hong Kong and 0.4% in Shanghai after S&P Global Market Intelligence raised its forecast for China’s economic growth rate this year to 4.8% from 4.7% in April. , emphasized that he was not overly optimistic.
“The overall outlook for a gradual economic recovery remains unchanged, with the economy expanding supported by stronger policy stimulus, stronger external demand and gradually improving private sector confidence,” the report said. .
___
AP Business writers Yuri Kageyama and Matt Ott contributed.
