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US Stocks Mixed Thursday 08/11 16:00
An afternoon pullback left stock indexes on Wall Street with a mixed finish
Thursday, erasing most of their gains from a morning rally over new signs of
cooling inflation.
NEW YORK (AP) -- An afternoon pullback left stock indexes on Wall Street
with a mixed finish Thursday, erasing most of their gains from a morning rally
over new signs of cooling inflation.
The S&P 500 closed 0.1% lower after having been up 1.1% in the early going.
The Nasdaq fell 0.6%, while the Dow Jones Industrial Average eked out a 0.1%
gain.
The indexes got a big boost early on following a report showing inflation at
the wholesale level slowed more than economists expected last month. The
report, which came a day after a cooler-than-expected reading on inflation at
the consumer level, bolstered hopes among investors that inflation may be close
to a peak and that the Federal Reserve will be less aggressive about raising
interest rates than feared.
Even so, the morning rally didn't hold. The selling coincided a sharp upward
move in bond yields and rising energy prices, which have been a central
component of higher inflation.
"People stepped back and the inflation outlook isn't that much different
than what it was before," said Willie Delwiche, investment strategist at All
Star Charts. "There's still a lot of work for the Fed to do. Maybe a little bit
too much short-term euphoria kind of got in the market."
Inflation is still painfully high, of course, and the economy has given
false signals before that relief was on the way only for the rug to get pulled
out from underneath investors. Some Fed officials also made comments after
Wednesday's inflation report suggesting their battle against rising prices is
far from over. But enough hope for a peak in inflation and Fed aggressiveness
has built that the S&P 500 has roughly halved its losses from earlier in the
year, and it's up more than 14% from its bottom in mid-June.
Technology stocks and other investments beaten down the most earlier in the
year by the Fed's aggressive rate hikes have been among the strongest, and the
Nasdaq has climbed more than 20% from its low in June.
The S&P 500 slipped 2.97 points to 4,207.27 Thursday but it's still on pace
for a fourth consecutive weekly gain.
The Nasdaq fell 74.89 points to 12,779.91, and the Dow rose 27.16 points to
33,336.67. The Russell 2000 index of smaller companies rose 6.01 points, or
0.3%, to 1,975.26. The three indexes are also on pace for a weekly gain.
Technology and health care stocks were among the biggest weights on the S&P
500, keeping gains by energy companies, banks and other sectors in check.
The Walt Disney Co. jumped 4.7% after the entertainment company reported
stronger profit for its latest quarter than analysts expected. It cited strong
performance at its U.S. theme parks and announced price increases for its
streaming services.
Companies whose profits most depend on a strong economy generally held up
better. Energy stocks as a group rose 3.2% for the biggest gain among the 11
sectors that make up the S&P 500. They benefitted from rising prices of oil and
natural gas. Shares of raw-material producers in the index gained 0.3%, and
financial companies rose 1%.
Worries about a possible recession still loom over the market, as the
Federal Reserve continues to raise interest rates to fight inflation. Such
increases slow the economy by design, and some parts of the economy have
already weakened under their weight, particularly the housing industry. But a
resilient jobs market has offered a strong counterweight, leading to a muddied
outlook for the economy.
A report on Thursday showed fewer U.S. workers filed for jobless claims last
week than expected, a potentially encouraging sign about layoffs. But it was
nevertheless the highest number since November.
Traders are now betting on the Fed to raise overnight interest rates by half
a percentage point at its meeting next month. That's down from the hike of 0.75
percentage points they were forecasting before Wednesday's stunner of a report
on inflation at the consumer level.
The Fed's last two increases were by 0.75 points, accelerating from its two
earlier hikes of the year, as the central bank upped its fight against high
inflation. Even if the Fed can manage to slow the economy enough to stamp out
inflation without causing a recession, higher interest rates pull downward on
prices for all kinds of investments regardless.
Treasury yields mostly rose Thursday, after paring earlier losses. The
10-year yield rose to 2.89% from 2.79% late Wednesday, a big move.
It's still below the two-year yield, which sits at 3.21%. That's a
relatively unusual occurrence that some investors see as a fairly reliable
signal of a pending recession, though the gap between the two has narrowed
somewhat.
In markets overseas, European stocks closed mixed, while Asian indexes were
mostly higher.
In Thailand, the SET gave up 0.2% after the country's central bank raised
its benchmark interest rate by 0.25 percentage points to 0.75% a day earlier.
The Southeast Asian country's economy has been hard hit by the pandemic, which
ravaged its all-important tourism sector.
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