Most U.S. stocks are weakening due to concerns about high interest rates despite strong profit reports from some companies. The S&P 500 was 0.3% lower, the Dow Jones Industrial Average was up 0.2%, and the Nasdaq composite was 0.2% lower. UnitedHealth and Morgan Stanley saw gains, but Northern Trust and Johnson & Johnson faced losses. Companies are feeling the pressure to report higher profits and revenue as interest rates remain high.
Traders are adjusting their forecasts for when the Federal Reserve will start cutting interest rates, which are currently at their highest level in over two decades. Reports showing higher inflation and strong economic performance are leading to worries that the Fed will maintain high rates for longer to combat inflation. Treasury yields rose after a comment from the Federal Reserve’s vice chair suggested inflation would ease but rates would remain steady for now.
Federal Reserve Chair Jerome Powell’s upcoming speech could prompt further market fluctuations as traders adjust their predictions for rate cuts this year. Traders had initially expected multiple rate cuts, but now anticipate only one or two reductions. The yield on the 10-year Treasury rose to 4.66%, while the yield on the two-year Treasury increased to 4.95%. Stocks that are sensitive to interest rates, such as real-estate investment trusts and utility stocks, were leading the market lower.
The stock of Donald Trump’s social-media company, Trump Media & Technology Group, continued to decline after announcing a new streaming service on its Truth Social app. The company’s stock fell 10.4% following an 18.3% drop the previous day. Stock markets in Asia and Europe also saw declines, mirroring the losses on Wall Street. Indexes fell in Hong Kong, Seoul, and London, highlighting the global impact of market trends. Investors are closely monitoring developments in interest rates and inflation to gauge the future direction of the market.
Overall, the market reflects a delicate balance between strong corporate earnings and concerns over high interest rates. Companies like UnitedHealth and Morgan Stanley are propping up the market with positive results, while others like Northern Trust and Johnson & Johnson are facing setbacks. Traders are closely watching statements from Federal Reserve officials, such as Jerome Powell, to understand the central bank’s approach to inflation and rates. The fluctuations in stock prices and Treasury yields indicate the uncertainty in the market as investors navigate evolving economic conditions.
