new york –
Stocks were higher on Monday, making up for some of the losses from Wall Street’s worst week since early December.
The S&P 500 rose 0.8% in early trading, marking its second gain in the past seven days. As of 9:40 am ET, the Dow Jones Industrial Average was up 228 points, or 0.7%, to 33,045, and the Nasdaq Composite was up 1%.
After a strong start to the year, stocks struggled in February as reports showed inflation and the overall economy remained more resilient than expected. While strong economic data eases fears that a recession is imminent, Wall Street is raising expectations about how high the Fed will raise interest rates and how long it will keep them. was forced to
High interest rates can lower inflation, but they also slow down the economy, thus increasing the risk of future recessions. It also affects the price of stocks and other investments.
Rising expectations of rate hikes are most evident in the bond market, where yields have surged in recent weeks. Yields fell slightly on Monday, easing some of the pressure on equities.
The 10-year Treasury yield fell to 3.91% from 3.95% late on Friday. Helps set interest rates for mortgages and other important loans. The 2-year yield driven by expectations for the US Federal Reserve (Fed) fell to 4.80% from 4.81%. It is approaching the highest level since 2007.
Yields fell after it was reported that orders for machinery, aircraft and other long-lasting products fell more than economists had expected in January.
After the Federal Reserve raised interest rates last year at the fastest pace in decades, economists expect the economy to soften further. The Fed’s key overnight rate has ranged from virtually zero early last year to 4.50% now to his 4.75%.
But reports on everything from the job market to retail sales to inflation itself have been stronger than expected in the past few weeks. The concern is that upward pressure on inflation could increase if the economy remains strong. So the reason for the wild swings in Wall Street expectations was that previously we thought the Fed might ease interest rates, but now we think they can raise rates above 5.25% and keep them high until the end of the year. Because we believe.
Even Monday’s weaker-than-expected report on durable goods had some potential strength. The decline was much stronger than economists had expected.
Union Pacific stock surged 9.6% on Wall Street after Union Pacific Railroad announced plans to replace its CEO later this year. The company is under heavy pressure from hedge funds that have gone public over concerns about Lance Fritz’s leadership.
Energy company AES fell 1% after reporting better-than-expected earnings and earnings in the most recent quarter.
Most companies have already reported results for the last three months of 2022, but nearly 30 companies in the S&P 500 are set to report again this week.
Many may offer a window into how well U.S. households are holding up amid rising interest rates and still-high inflation.Advance Auto Parts, Best Buy, Costco Wholesale, Kroger, Target, etc. are some of the companies on this week’s schedule.
Overall, the earnings reporting season has been lackluster. The S&P 500 company is set to report its first earnings-per-share decline a year ago since the summer of 2020, when the pandemic choked the economy.
Fewer than usual companies beat analyst earnings estimates, according to FactSet.
The concern is that there could be an “earnings slump” in which corporate profits drop from the previous year’s levels for at least two consecutive quarters. Rising interest rates and other costs are putting pressure on corporate profit margins. That means you’re not making as much profit from every $1 in sales as you used to.
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Contributed by AP Business Writers Elaine Kurtenbach and Matt Ott.
