Wall Street rises to soften the blow of its 3rd straight losing month
Wall Street rose Tuesday to take a bit of the edge off another losing month.
The Standard & Poor’s 500 index gained 26.98 points, or 0.6%, to 4,193.80, a day after clawing back a bigger chunk of its loss for October. The Dow Jones industrial average added 123.91 points, or 0.4%, to 33,052.87, and the Nasdaq composite climbed 61.75 points, or 0.5%, to 12,851.24.
Most stocks ended up climbing after indexes swayed between small gains and losses through the morning, and more than 80% of the stocks in the S&P 500 strengthened.
Pinterest jumped 19% after reporting stronger profit for the latest quarter than analysts expected. It cited growth in users around the world, with Europe particularly strong.
Arista Networks was one of the strongest forces pushing the S&P 500 upward and climbed 14% after also reporting stronger profit for the summer than Wall Street had forecast. Analysts raised their estimates for future growth following the report on expectations that the company will benefit from the artificial intelligence boom.
The majority of big U.S. companies have been reporting stronger profit for the summer than expected, and Caterpillar joined them. But the heavy machinery maker’s stock sank 6.7% after analysts focused on a slowdown in orders and growing inventories at dealers.
JetBlue Airways tumbled 10.5% after it reported a worse loss for the summer than expected. It said demand for travel is still strong during peak periods, but the industry has too many seats chasing after too few passengers during off-peak times. It also called the magnitude of air-traffic control and weather-related delays “staggering.”
The UAW’s great new contracts with GM, Stellantis and Ford show that union solidarity and concrete goals bring major victories for workers for the first time in decades.
VF Corp., the company behind Vans, Timberlands and other brands, dropped 14% after it reported weaker profit than expected. It also slashed its dividend 70% and withdrew its forecasts for revenue and profit this fiscal year.
Even though the big companies in the S&P 500 seem to be on track to report their first overall growth in earnings per share in a year, the main index of Wall Street’s health is still heading for a loss of 3% for the month. That‘s its third straight monthly drop, the longest losing streak since the COVID-19 pandemic froze the global economy at the start of 2020.
A big reason for the weakness has been the swift rise in Treasury yields in the bond market. The 10-year Treasury yield, which is the centerpiece of the bond market, has jumped from less than 3.50% during the spring to more than 5% earlier this month, touching its highest level since 2007.
Higher yields knock down prices for stocks and other investments, while slowing the overall economy and adding pressure on the entire financial system.
The 10-year Treasury yield ticked higher to 4.90% from 4.89% late Monday, and much of Wall Street is focused on what’s coming Wednesday afternoon. That’s when the Federal Reserve will make its latest announcement on interest rates.
The Fed has already pulled its main overnight interest rate above 5.25%, its highest level since 2001. It’s been saying it will make upcoming moves based on what data say about inflation and the job market, where the worry is that too-strong growth could give inflation more fuel.
Economists are preoccupied with making predictions about the future path of the U.S. economy, but keep getting fooled by the truth.
Reports on the economy Tuesday morning came in mixed. One said that growth in wages and benefits for U.S. workers slowed during the summer compared with year-earlier levels, but not by as much as economists expected.
The data “points to a disappointingly gradual moderation,” said EY Chief Economist Gregory Daco, and wage growth remains above the Fed’s comfort level.
Another report said that confidence among U.S. consumers weakened last month, but not by as much as economists expected.
Strong spending by U.S. households has been one of the main reasons the economy has avoided a long-predicted recession, but it could also be adding upward pressure on inflation. That’s why the Fed is nervous about too strong growth in wages, as workers fight for higher pay amid high inflation.
The widespread expectation on Wall Street is still for the Fed to keep its overnight interest rate steady Wednesday. The bigger question is how long it will keep that main rate high, before cutting it to offer financial markets some more oxygen.
In Tokyo, the Bank of Japan added more upward pressure on interest rates. It said it would allow yields on 10-year bonds to rise above 1%, calling it “a reference point” instead of a more rigidly set cap. Even so, analysts said investors probably were braced for something even tougher from Japan, which is home to some of the easiest interest-rate policies around the world.
Japan’s Nikkei 225 rose 0.5%, an outlier among losses across much of Asia amid worries about China’s economic strength. Stocks indexes in Europe were modestly higher.
AP writers Yuri Kageyama, Matt Ott and Alex Veiga contributed to this report.
