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Financial Markets 02/14 15:24
NEW YORK (AP) -- Wall Street edged back from its all-time high on Friday, as
U.S. stock indexes drifted following mixed profit reports from big companies.
The S&P 500 barely budged and slipped by less than 0.1%, a day after
rallying within 0.1% of its record set last month. The Dow Jones Industrial
Average dipped 165 points, or 0.4%, while the Nasdaq composite rose 0.4%.
The S&P 500 still closed out its first winning week in the last three thanks
in part to reports showing companies made even fatter profits at the end of
2024 than analysts expected. They've helped the market power through a range of
worries centered on higher interest rates and stubborn inflation.
Airbnb climbed 14.4% after reporting stronger profit for the latest quarter
than analysts expected as customers booked more nights on its platform. Wynn
Resorts jumped 10.4% after likewise topping earnings expectations, thanks in
part to strength for its Las Vegas operations.
On the losing side of Wall Street was Applied Materials, which dropped 8.2%.
The company, whose products help make semiconductor chips, displays and other
tech, also reported stronger profit for the latest quarter than analysts
expected. But it gave a forecasted range for upcoming revenue whose midpoint
fell short of Wall Street's expectations.
All told, the S&P 500 slipped 0.44 to 6,114.63. The Dow Jones Industrial
Average dipped 165.35 points to 44,546.08, and the Nasdaq composite rose 81.13
to 20,026.77.
In the bond market, Treasury yields fell after a report said sales at U.S.
retailers weakened by much more last month than economists expected. Bad
weather, including bitingly cold temperatures in the South and devastating
wildfires in California, may have helped keep shoppers away from stores and
auto dealerships.
The hope among investors has been for economic data to remain at a
Goldilocks level, where it's not so weak that it raises worries about a
downturn but not so strong that it creates upward pressure on inflation.
This past week featured a couple disappointing reports that showed inflation
unexpectedly accelerated last month. Besides squeezing tighter on U.S.
households' budgets, such stubbornly high inflation is likely to keep the
Federal Reserve on hold for a while when it comes to providing relief through
lower interest rates.
Inflation may feel more upward pressure from tariffs that President Donald
Trump has announced recently. So far, though, the U.S. stock market has taken
such threats in stride. The belief is that Trump is using tariffs as a tool for
negotiation, and he may ultimately avoid triggering a punishing global trade
war in order to prevent damage to the U.S. stock market and economy.
His most recent tariff announcement, for example, won't take full effect for
at least several weeks. That leaves time for Washington and other countries to
negotiate and hopefully lessen the ultimate shock.
"Tariffs on Chinese goods have gone into effect," said Brian Jacobsen, chief
economist at Annex Wealth Management. "All of the other things that have been
discussed -- reciprocal tariffs, steel and aluminum tariffs, and tariffs on
Canada and Mexico -- haven't actually gone into effect, yet. That opens the
door the negotiations."
The market's remarkable equanimity, of course, could be dangerous if things
don't go according to Wall Street's expectations, or if it emboldens Trump to
make even more forceful moves.
In the bond market, the yield on the 10-year Treasury fell to 4.47% from
4.54% late Thursday. It's been swinging sharply since the Federal Reserve began
cutting its main interest rate sharply from September intending to make
borrowing cheaper, help the economy and boost prices for stocks, bonds and
other investments.
The 10-year yield has been mostly climbing since then, in the opposite
direction the Fed has taken short-term rates, as the U.S. economy has remained
solid and as worries built about tariffs, increasing deficits and other
potential policies that could goose inflation along with economic growth.
The Fed warned at the end of 2024 it may not cut rates by as much in 2025
because of worries about inflation staying stubbornly high. Its goal is to keep
inflation at 2%, and lower rates can give inflation more fuel.
In stock markets abroad, indexes were mixed across Europe and Asia.
Hong Kong's Hang Seng surged 3.7% for one of the biggest moves. Technology
stocks were particularly strong, including big rallies for video games firm
Tencent, smartphone maker Xiaomi and e-commerce firm Alibaba.
___ AP Writers Matt Ott and Zen Soo contributed.
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