NEW YORK (AP) — U.S. stocks are edging lower Tuesday, hurt by drops for Ford Motor, homebuilders and others as more companies report how much profit they made during the summer.
The S&P 500 was 0.3% lower in early trading, though it’s still near its all-time high set earlier this month. The Dow Jones Industrial Average was down 163 points, or 0.4%, as of 9:35 a.m. Eastern time, while the Nasdaq composite was 0.2% lower and sitting just below its own record set in July.
Ford sank 9% after saying an underlying measure of profit for the full year will likely come in at the bottom end of its forecasted range. The automaker said stubbornly high warranty expenses and other costs are holding back its profits, though its results for the third quarter were better than analysts expected.
JetBlue Airways lost 12.7% even though its results for the latest quarter were better than analysts expected. The carrier said its revenue could fall between 3% and 7% in the last three months of 2024 from a year earlier, hurt by this month’s Hurricane Milton and the upcoming U.S. presidential election.
D.R. Horton tumbled 12.5% after the homebuilder reported weaker profit and revenue for the latest quarter than analysts expected. Executive Chairman David Auld said some potential home buyers are waiting for mortgage rates to become more affordable and are sitting on the sidelines.
D.R. Horton’s results dragged down stocks of other homebuilders. Lennar and PulteGroup both fell at least 5%.
Mortgage rates have been climbing recently because the 10-year Treasury yield has been charging higher.
Yields have rallied as report after report has shown the U.S. economy remains stronger than expected. That’s good news for Wall Street, because it bolsters hopes the economy can escape from the worst inflation in generations without the painful recession that many had worried was inevitable.
But it’s also forcing traders to ratchet back forecasts for how deeply the Federal Reserve will cut interest rates, now that it’s just as focused on keeping the economy humming as getting inflation lower. A small number of traders are even betting on the possibility that the Fed will keep its main interest rate steady next month, according to data from CME Group. That’s after the Fed kicked off its rate-cutting campaign in September with a larger-than-usual reduction.
With bets diminishing on how much the Fed will ultimately cut rates, Treasury yields have been given back some of their earlier declines.
Yields have also climbed as investors have seen former President Donald Trump’s chances of re-election improving. Economists say a Trump win could help push inflation higher in the long term, and worsening inflation could push the Fed to hike interest rates.
Trump Media & Technology Group, the company that tends to move more with Trump’s re-election odds than on its own profit prospects, climbed another 13.6% to $53.80 Tuesday. The parent company of Trump’s Truth Social platform has been rallying since hitting a bottom of roughly $12 in late September.
Another winner was McDonald’s, which rose 1.5% after edging past analysts’ forecasts for profit and revenue int he latest quarter. That was even though an important underlying measure of revenue sank more in the latest quarter than Wall Street was expecting. The fast-food chain is also still smarting from the effects of a recent E. coli outbreak.
Treasury yields climbed again Tuesday, and the 10-year yield rose to 4.32% from 4.28% late Monday and just 3.60% in the middle of last month. Treasury yields, like stocks, have historically tended to be shaky heading into an Election Day, only to calm afterward regardless of which party wins.
In stock markets abroad, indexes mostly made modest moves outside of a 1.1% drop for stocks in Shanghai.
Crude oil prices edged higher to regain some of their sharp 6.1% drop from the prior day. Brent crude, the international standard, rose 0.4%.
Worries about an expanding war in the Middle East had sent the price of Brent up to nearly $81 per barrel in early October, despite signals that plenty of oil is available for the global economy. It’s since fallen back below $72.
___
AP Business Writers Yuri Kageyama and Matt Ott contributed.
