sunny.png
Saturday January 28th, 2023 6:10PM

Wall Street weakens on worries about corporate profits

By The Associated Press

NEW YORK (AP) — Wall Street is weakening Wednesday on worries about corporate profits following a mixed set of earnings reports and forecasts from Microsoft and others.

The S&P 500 was 0.3% lower in afternoon trading after falling as much as 1.7% in the morning. It's on pace for a second step down after reaching its highest level in seven weeks on Monday. The Dow Jones Industrial Average was down 56 points, or 0.2%, at 33,677, as of 2:43 p.m. Eastern time, and the Nasdaq composite was 0.4% lower.

Microsoft fell 0.3% after giving a forecast for upcoming results that fell short of some analysts’ expectations. They pointed in particular to expectations for slowing growth in its Azure cloud business.

Microsoft is one of Wall Street’s dominant stocks because it’s one of the largest, which gives its stock movements more sway over the S&P 500 than others. Not only that, analysts say Microsoft offers one of the best windows into the strength of corporate spending because of how many businesses use its software and services.

Other stocks in the cloud-computing industry also fell following Microsoft's forecast. Snowflake lost 1.4%.

Worries are rising that corporate profits are set to shrink broadly because of an economy bending under the weight of hikes to interest rates and still-high inflation. Analysts are forecasting S&P 500 companies over the next couple weeks will report their first drop in quarterly earnings per share since 2020, when the pandemic was crushing the economy.

Intuitive Surgical fell 5.8%, and Nasdaq Inc., the company behind the Nasdaq Stock Market, fell 6.8% after both reported weaker results than analysts expected.

Texas Instruments fell 1.5% despite reporting stronger profit and revenue than expected. Markets were more interested in the company's forecast for the first three months of 2023. Company officials said they're expecting continued weakening in demand across all its markets outside of automotive.

On the winning side was AT&T, which rose 5.6% after reporting stronger profit than forecast.

Other big tech-oriented companies are scheduled to report their results after trading closes for the day, including Tesla and IBM.

The level of cash and profit that companies produce is one of the main levers that set stock prices on Wall Street. The other big one depends largely on interest rates, and there’s still a wide disconnect between what investors and the Federal Reserve see as coming later this year.

Nearly everyone is expecting the Fed to raise its key overnight interest rate by 0.25 percentage points on Feb. 1. That would be another downshift in the size of the Fed’s rate hikes, down from 0.50 points last month and four straight increases of 0.75 points earlier. A slowdown in inflation since a summertime peak is raising hopes for the Fed to apply less additional pressure on the economy.

Many investors expect inflation to keep cooling, and they’re betting on the Fed to actually begin cutting interest rates toward the end of this year. The Federal Reserve, meanwhile, says it wants to keep rates high at least through the end of the year to ensure high inflation is truly stamped out.

Higher rates hurt the economy by making it more expensive for businesses and households to borrow. They also hurt prices for stocks and other investments.

The yield on the 10-year Treasury, which helps set rates for mortgages and other economy-dictating loans, rose to 3.47% from 3.46% late Tuesday. The two-year yield, which moves more on expectations for the Fed, fell to 4.14% from 4.21%.

European stocks closed modestly lower. Japanese and South Korean stocks rose, while Chinese markets remained closed in observance of holidays.

___

AP Business Writers Damian J. Troise, Yuri Kageyama and Matt Ott contributed.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets
© Copyright 2023 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
7 murder counts expected in Half Moon Bay farm killings
Prosecutors say they will charge a farmworker accused of killing seven people in back-to-back shootings at two Northern California mushroom farms with seven counts of murder and one count of attempted murder
12:26PM ( 3 minutes ago )
Wall Street weakens on worries about corporate profits
Wall Street is weakening on worries about corporate profits following a mixed set of earnings reports and forecasts from Microsoft and others
12:20PM ( 10 minutes ago )
Feds: Investigation into Tyre Nichols' death may take time
The U_S_ Attorney’s Office said Wednesday the federal investigation into the death of Tyre Nichols, a Black man who died after a violent arrest by Memphis police, “may take some time.”
12:14PM ( 15 minutes ago )
Associated Press (AP)
Manchin bill would delay tax credits for electric vehicles
Democratic Sen. Joe Manchin is moving to delay new tax credits for electric vehicles, a key feature of President Joe Biden’s landmark climate law
11:48AM ( 41 minutes ago )
Wall Street tumbles on worries about corporate profits
Wall Street is tumbling on worries about how badly corporate profits will get hit by a slowing economy following a mixed set of earnings reports and forecasts from Microsoft and others
11:00AM ( 1 hour ago )
Justice Dept. sues Google over digital advertising dominance
The Justice Department and eight states have filed an antitrust suit against Google
10:11AM ( 2 hours ago )
AP Business
Global shares mixed, China markets closed for holidays
Global shares are trading mixed after Wall Street indexes finished little changed as investors awaited earnings results from major global companies
4:38AM ( 7 hours ago )
Asia shares trading mixed, China markets closed for holidays
Asian shares are trading mixed after Wall Street indexes finished little changed, as investors awaited earnings results from major global companies
1:48AM ( 10 hours ago )
Soaring egg prices prompt demands for price-gouging probe
With egg prices more than doubling in the past year, calls are coming for an investigation into possible price gouging
5:28PM ( 19 hours ago )
AP Business - Financial Markets
Feds: Investigation into Tyre Nichols' death may take time
The U_S_ Attorney’s Office said Wednesday the federal investigation into the death of Tyre Nichols, a Black man who died after a violent arrest by Memphis police, “may take some time.”
12:14PM ( 15 minutes ago )
7 murder counts expected in Half Moon Bay farm killings
Prosecutors say they will charge a farmworker accused of killing seven people in back-to-back shootings at two Northern California mushroom farms with seven counts of murder and one count of attempted murder
12:13PM ( 16 minutes ago )
AmazonSmile's end is alarming, say nonprofits that benefited
Since 2013, more than 1 million charities received donations from AmazonSmile, which sent a small portion of a customer's purchase on Amazon to a nonprofit of their choice
12:10PM ( 19 minutes ago )
Despite concerns, US to send 31 Abrams tanks to Ukraine
The U.S. will send 31 M1 Abrams battle tanks to Ukraine, a decision that reverses months of persistent arguments by the Biden administration that the tanks were too difficult for Ukrainian troops to operate and maintain
12:07PM ( 22 minutes ago )
Manchin bill would delay tax credits for electric vehicles
Democratic Sen. Joe Manchin is moving to delay new tax credits for electric vehicles, a key feature of President Joe Biden’s landmark climate law
11:48AM ( 41 minutes ago )