Stock market today: Wall Street drifts in early trading as its momentum ebbs following a big run
By STAN CHOE
AP Business Writer
NEW YORK (AP) — U.S. stock indexes are drifting on Wednesday, as Wall Street’s momentum flags following its huge run over the last six months.
The S&P 500 was virtually unchanged in early trading, coming off its worst day in four weeks. The Dow Jones Industrial Average was also essentially flat, as of 9:40 a.m. Eastern time, and the Nasdaq composite was down 0.2%.
Intel sank 7% after disclosing financial details about several key parts of its business for the first time, including its foundry business, which is losing money. Cal-Maine Foods, meanwhile, rose 5.3% after reporting stronger profit for the latest quarter than expected by selling a record number of eggs.
Stocks have broadly slowed their roll since screaming 26% higher from November through March. Worries are rising that a remarkably resilient U.S. economy could prevent the Federal Reserve from delivering as many cuts to interest rates this year as earlier hoped. Critics have also been saying at least a pullback was overdue after stock prices had grown expensive by several measures.
The Fed has been indicating that it still may cut its main interest rate three times this year, down from its highest level since 2001. Such cuts would offer relief to the economy and financial system, while also boosting prices for investments. But they will arrive, Fed officials say, only if more evidence arrives to show inflation is heading down toward their goal of 2%.
Several reports on the economy have come in stronger than expected recently. Such strength is encouraging to Wall Street because it means the economy continues to avoid a recession, and it should provide support for corporate profits. But it also could add upward pressure on inflation and discourage the Fed from cutting rates.
The latest report to show stronger gains than expected was a monthly update on hiring in the private sector from the ADP Research Institute. It suggested employers accelerated their hiring last month, when economists were forecasting a slowdown.
A more comprehensive report on the job market for March will arrive from the U.S. government on Friday, and it will likely be the week’s headline economic data.
Traders have already drastically reduced their expectations for how many times the Federal Reserve will cut interest rates this year, halving them from a forecast of six at the start of the year. Some are preparing for two or even zero cuts this year because the Fed may not want to begin lowering rates to close to November’s election out of fear of appearing political.
In the bond market, yields rose to raise the pressure on stocks. The 10-year yield climbed to 4.41% from 4.36% late Tuesday.
The two-year yield, which more closely tracks with expectations for Fed action, rose to 4.72% from 4.70%.
In stock markets abroad, European indexes were mixed amid modest movements. A report showed that inflation in Europe eased by more than expected in March to 2.4%, but analysts say that might not be enough to move up the European Central Bank’s first cut to interest rates.
Asian markets fell more sharply earlier in the day, following up on Wall Street’s losses from Tuesday. Indexes fell 1.7% in Seoul, 1% in Tokyo and 1.2% in Hong Kong.
A new report from Moody’s Ratings said China’s slowing economy will aggravate difficult business conditions for Japanese manufacturers in the next year to year and a half.
“China is an important market for Japanese manufacturers of factory automation and other industrial equipment, automotive parts, and elevator and escalator systems. A decline in Chinese demand would weigh on the companies’ overall earnings and cash flow,” it said.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
