NEW YORK (AP) —
Wall Street is mixed Monday, ahead of a week heavy with potentially market-moving reports toward the end of it.
The S&P 500 was 0.2% higher in early trading, coming off its first losing week in the last 10. The Dow Jones Industrial Average was down 166 points, or 0.4%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.6% higher.
Boeing was the heaviest weight dragging the Dow lower in its first trading after one of its jets suffered an inflight blowout over Oregon. It fell 8.8%. Spirit Aerosystems, which builds fuselages and other parts for Boeing, lost 13.3%.
Stocks of oil-and-gas companies were also particularly weak after crude prices tumbled more than 4%. Exxon Mobil fell 3.2%, and Chevron lost 2.3%.
But much of the rest of Wall Street was holding up better. Commercial Metals Co. rose 4.1% after reporting stronger profit for the latest quarter than analysts expected. It said construction activity is healthy in North America, driving demand for steel and helping to offset weaker conditions in Europe.
More earnings results will be arriving at the end of the week, with Delta Air Lines, JPMorgan Chase and UnitedHealth Group on Friday among those kicking off the S&P 500’s reporting season for the final three months of 2023.
The highlight of the week may be Thursday’s release of the latest inflation data for U.S. consumers. A cooldown there has helped ignite tremendous hope on Wall Street that the Federal Reserve will soon see enough improvement to not only halt its hikes to interest rates but begin cutting them.
The Fed has already hiked its main interest rate to the highest level since 2001, which grinds down on the economy and hurts prices for investments, in hopes of conquering high inflation. The Fed last month said it’s seen improvement, and Wall Street’s expectation is for it start cutting rates as soon as March.
Treasury yields have already sunk in the bond market on such expectations, and they were holding relatively steady Monday. The yield on the 10-year Treasury slipped to 4.02% from 4.05% late Friday. It was above 5% during October, at its highest point since 2007 and putting sharp downward pressure on the stock market.
The resulting rally for stocks carried the S&P 500 near its all-time high. But that strength has also caused some on Wall Street to say at least a pause for stocks is likely in the near term. The market looks “extremely expensive,” according to Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.
Critics also warn that traders on Wall Street may be too optimistic about how deeply the Federal Reserve may cut rates this year. The Fed has indicated maybe three cuts may arrive in 2024, but traders have made moves in anticipation of roughly double that. Such a high number may not be likely unless a recession arrives to force the Fed’s hand, critics say.
That’s why much focus is on corporate profits, where growth could help prop up stock prices.
Analysts expect companies in the S&P 500 to report growth of 1.3% in earnings per share for the fourth quarter of 2023 from a year earlier, according to FactSet. While that’s a relatively meager number, it would mark just a second straight quarter of growth.
The economy has so far remained resilient despite worries coming into last year about a looming recession. That has helped protect revenue for companies. But their costs have also climbed with inflation still high across the economy, squeezing their profits.
Helen of Troy, the company behind such brands as Hydro Flask, Osprey and Drybar, rose 1% after reporting stronger profit for its latest fiscal quarter than analysts expected. Incoming CEO Noel Geoffroy said the company did better than it had expected despite “what continues to be a challenging macro consumer environment.”
Elsewhere on Wall Street, the fallout from the weekend’s blowout of a Boeing jet flown by Alaska Airlines spread widely. Alaska Air Group sank 4.2%. United Airlines, which flies the same Boeing model and also had to cancel flights due to its grounding, opened lower but quickly swung to a small gain.
Stock markets overseas were mixed.
Hong Kong’s Hang Seng sank 1.9%, led by losses for property and technology shares, while stocks fell 1.4% in Shanghai.
Property shares tumbled after Zhongzhi Enterprise Group, a major lender to real estate developers, filed for bankruptcy in Beijing. China also announced sanctions Sunday against five American defense-related companies in response to U.S. arms sales to Taiwan and U.S sanctions on Chinese companies and individuals.
The announcement came ahead of an election in Taiwan that is centered around the self-ruled island’s relationship with China, which claims it as its own territory.
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AP Writers Zimo Zhong and Matt Ott contributed.
Stan Choe, The Associated Press
