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On Friday stocks on Wall Street shook off a downbeat start and ended broadly higher Friday, though the rebound was not enough to erase their losses for the week.

The S&P 500 rose 1.1% after having been down 0.9% in the early going. The gain snapped a four-day losing streak for the benchmark index, which still posted its fourth losing week in the last five.


The Dow Jones Industrial Average rose 1%, while the tech-heavy Nasdaq gained 0.9% after a sell-off in technology stocks eased.

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NYSE closed for Independence Day, the Fourth of July, is the National Day of the United States of America


World shares mostly higher ahead of July 4 holiday in US​

By ELAINE KURTENBACH

BANGKOK (AP) — World shares are mostly higher while U.S. futures fell ahead of the July 4 holiday in the U.S. Benchmarks rose in London, Paris, Frankfurt and Tokyo but fell in Hong Kong and Seoul.

Last week was the fourth losing week in the last five for Wall Street as investors fret over high inflation and the possibility that higher interest rates could bring on a recession.

The most optimistic scenario, a “Goldilocks outcome,” would bring a slowdown significant enough to cool inflation running at its highest level in four decades but not so strong as to result in a “hard landing,” Mizuho Bank said in a commentary.

“This is a tall order that is far from guaranteed at this point,” it said, noting that markets will be looking to comments in minutes from the last Federal Reserve policy meeting, expected Wednesday.

Economic data over the last few weeks has shown that inflation remains hot and the economy is slowing. The latter has raised hopes on Wall Street that the Fed will eventually ease off its push to raise rates, which have been weighing on stocks, especially pricier sectors like technology.

Analysts don’t expect much of a rally for stocks until there are solid signs that inflation is cooling, and the latest data has yet to show that. Friday brought a report that Inflation in countries using the euro had set another eye-watering record, pushed higher by a huge increase in energy costs fueled partly by Russia’s war in Ukraine

Annual inflation in the eurozone’s 19 countries hit 8.6% in June, surging past the 8.1% recorded in May, according to the latest numbers published Friday by the European Union statistics agency, Eurostat. Inflation is at its highest level since recordkeeping for the euro began in 1997.

Tokyo’s Nikkei 225 rose 0.8% to 26,153.81 on Monday.

Shares in Japanese telecoms carrier KDDI Corp. lost 1.7%. They fell as much as 4% earlier Monday as the company grappled with outages that began early Saturday, affecting services to nearly 40 million people.

The company said Monday that most data-transmission services had been restored, but phone calls were still affected by the problems which KDDI said were technical issues with switching systems.

The Shanghai Composite index added 0.5% to 3,405.43. Australia’s S&P/ASX 200 climbed 1.1% to 6,612.60.

Hong Kong’s Hang Seng index lost 0.1% to 21,830.35 and the Kospi in Seoul declined 0.2% to 2,300.34. India’s Sensex advanced 0.3%, while shares fell in Bangkok and Taiwan.

On Friday, the S&P 500 rose 1.1%, recovering from early losses to close at 3,825.33. The gain snapped a four-day losing streak for the benchmark index, which still posted its fourth losing week in the last five.

The Dow Jones Industrial Average rose 1% to 31,097.26, while the tech-heavy Nasdaq gained 0.9% to 11,127.85.

The S&P 500 closed out its worst quarter since the onset of the pandemic in early 2020. Its performance in the first half of 2022 was the worst since the first six months of 1970. It has been in a bear market since last month, meaning an extended decline of 20% or more from its most recent peak.

The yield on the 10-year Treasury, which helps set mortgage rates, was steady at 2.89% after falling Friday from Thursday’s 2.97%.

Financial markets in the U.S. will be closed on Monday for Independence Day.

Wall Street remains concerned about the risk of a recession as economic growth slows and the Federal Reserve aggressively hikes interest rates. The Fed is raising rates to purposefully slow economic growth to help cool inflation, but could potentially go too far and bring on a recession.

High gas prices have been big factor in pushing prices higher and squeezing pocketbooks.

Early Monday, benchmark U.S. crude oil lost 67 cents to $107.76 per barrel in electronic trading on the New York Mercantile Exchange. It jumped $2.67 to $108.43 per barrel on Friday.

Brent crude, the pricing basis for international trading, shed 52 cents to $111.11 per barrel.

The U.S. dollar rose to 135.41 Japanese yen from 135.27 yen. The euro climbed to $1.0440 from $1.0429.

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US indexes shake off an early slump and eke out gains​

By DAMIAN J. TROISE and ALEX VEIGA

Stock indexes on Wall Street ended with meager gains Tuesday, as a late-afternoon rally led by technology companies stemmed the market’s losses after an early slump.

The S&P eked out a gain of 0.2% after having been down 2.2% earlier in the day. The Dow Jones Industrial Average lost 0.4%, while the tech-heavy Nasdaq composite closed 1.7% higher.

The weak opening, which followed a long weekend for the Independence Day holiday, came about as the price of U.S. crude oil fell sharply, eventually settling below $100 a barrel for the first time since early May. Bond yields also fell, a sign traders were seeking less risky assets.

Energy, industrial, health care and most of the 11 sectors in the S&P 500 ended in the red, despite the late-day rally in technology stocks, communication firms and retailers and other companies that rely on direct consumer spending.

The volatility reflects growing worries among investors that the economy is slowing under the weight of surging inflation and sharply higher interest rates, pressures that could tip the economy into a recession

“The market is really taking the growth slowdown as the primary driver today,” said Paul Kim, CEO of Simplified Asset Management. “So you’re seeing a modest sell-off in risk assets, but a significant sell-off in oil, energy, commodities tied to growth, as well as a a modest drop in yields.”

The S&P 500 rose 6.06 points to 3,831.39. The Nasdaq rose 194.39 points to 3,831.39. The Dow Jones Industrial Average remained in the red, losing 129.44 points to 30,967.82.

Small-company stocks also bounced back after a downbeat start. The Russell 2000 rose 13.57 points, or 0.8%, to 1,741.33.

European markets fell broadly.

Stocks remain in a slump that pulled the S&P 500 into a bear market last month, meaning an extended decline of 20% or more from a recent peak. The market’s performance in the first half of 2022 was the worst since the first six months of 1970.

Inflation has been squeezing businesses and consumers throughout the year, but tightened its grip after Russia invaded Ukraine in February. The invasion sent oil prices higher globally and sent gasoline prices in the U.S. to record highs. That prompted a pullback in spending from consumers struggling with higher prices on everything from food to clothing.

Lockdowns in China from rising COVID-19 cases have also made supply chain problems worse.

Central banks have been raising interest rates in an attempt to temper inflation. The Federal Reserve has been aggressive in its shift from historically low interest rates at the height of the pandemic to unusually big rate increases. But, that has raised concerns that the central bank could go too far in raising rates and hitting the brakes too hard on economic growth, which could bring on a recession.

Wall Street has been closely watching the latest economic updates for more clues on how inflation is impacting the economy and whether that could shift the Fed’s position on rate hikes. Wall Street will get a closer look at the employment market on Friday when the the government releases employment data for June.

Investors are also looking ahead to the next round of corporate earnings for a clearer picture of inflation’s impact. Several big companies recently warned that their financial results are being squeezed by inflation, including spice and seasonings maker McCormick.

Technology and communication stocks staged a turnaround and ended higher Tuesday. Apple rose 1.9% and Facebook parent Meta climbed 5.1%. Home Depot rose 1.7%, one of several big retailers that gained ground.

Energy companies had some of the biggest losses as the price of U.S. crude oil slumped 8.2% to $99.50 a barrel. That’s the lowest price since May 10, when it settled at $96.87 a barrel. Exxon Mobil fell 3.1% and Hess dropped 6.8%.

Banks fell along with bond yields. The yield on the 10-year Treasury, which helps set mortgage rates, fell to 2.82% from 2.90% late Friday. Bank of America dropped 1%.

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Stock indexes on Wall Street ended with meager gains Tuesday, as a late-afternoon rally led by technology companies stemmed the market’s losses after an early slump.

The S&P eked out a gain of 0.2% after having been down 2.2% earlier in the day. The Dow Jones Industrial Average lost 0.4%, while the tech-heavy Nasdaq composite closed 1.7% higher.


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Stocks rise after release of Fed meeting minutes​

By DAMIAN J. TROISE and ALEX VEIGA

Wall Street capped another choppy day of trading Wednesday with modest gains for the major stock indexes, after investors combed the minutes from the Federal Reserve’s most recent interest rate policy meeting for clues about what the central bank may do next to fight inflation.

The S&P 500 rose 0.4%, its third-consecutive gain, after spending much of the morning and early afternoon wavering between gains and losses. The Dow Jones Industrial Average rose 0.2%, while the the Nasdaq rose 0.3%.

Small company stocks remained in a slump, however, a sign that investors are worried about economic growth. The Russell 2000 gave up 0.8%.

Bond yields rose significantly. The yield on the 10-year Treasury, which helps set mortgage rates, jumped to 2.93% from 2.81% late Tuesday.

The minutes from the Fed’s two-day meeting last month show that the central bank’s policymakers concluded higher interest rates could be needed to restrain what they saw as a worrying trend: consumers starting to anticipate higher inflation. The policymakers also acknowledged that more rate hikes could weaken the economy.

The Fed’s minutes offered no major surprises for Wall Street, said Tom Martin, senior portfolio manager with Globalt Investments.

“What’s going to be much more interesting is what the Fed says in July,” Martin said.

The S&P 500 rose 13.69 points to 3,845.08. The Dow gained 69.86 points to 31,037.68. The Nasdaq rose 39.61 points to 11,361.85. The Russell 2000 fell 13.78 points to 1,727.55.

Major indexes have swung from sharp losses to gains on a day-to-day and even hour-to-hour basis lately, reflecting investors’ worries about inflation, rising interest rates and a potential recession. The broader market, though, is still mired in a deep slump that has dragged the S&P 500 into a bear market, over 20% below its most recent high.

Wall Street’s key concern centers around the Federal Reserve’s effort to rein in inflation, and the risk its plan could send the economy into a recession.

Inflation has squeezed businesses and consumers throughout the year. Its grip tightened after Russia invaded Ukraine in February and as China locked down several key cities to contain rising COVID-19 cases, which worsened supply chain problems.

Surging oil prices worsened inflation by sending gasoline prices in the U.S. to record highs. The price of U.S. crude oil is still up 36% for the year, but has been slipping throughout the week in a welcome sign for a market hoping for any signal that inflation could be easing.

U.S. crude oil fell 1% Wednesday. The price on Tuesday settled below $100 a barrel for the first time since early May.

Central banks have been raising interest rates in an attempt to temper inflation. The Fed has been particularly aggressive in its shift from historically low interest rates at the height of the pandemic to unusually big rate increases now. That has raised concerns that the central bank could go too far, hitting the brakes too hard on economic growth and bringing on a recession.

After last month’s meeting, the Fed raised its rate by three-quarters of a point to a range of 1.5% to 1.75% — the biggest single increase in nearly three decades — and signaled that further large hikes would likely be needed.

The minutes from the Fed’s June 14-15 meeting show that officials agreed that the central bank needed to raise its benchmark interest rate to “restrictive” levels that would slow the economy’s growth and “recognized that an even more restrictive stance could be appropriate” if inflation persisted.

The recent pullback in energy prices could mean lower gas prices in a few weeks and could signal that inflation is peaking, along with a cooling housing market.

“This takes the pressure off the Fed,” said Katie Nixon, chief investment officer for Northern Trust Wealth Management. “If we can see gas prices go down, that will pull through to consumer sentiment and that could give the Fed the ability to at least take some of the pressure off.”

Investors are closely monitoring economic data for clues about inflation’s impact, its trajectory, and what that means for the Fed’s position moving forward. A government report on job openings in May beat economists’ expectations in a sign that the employment market remains healthy. A report on the U.S. services industry showed that the sector’s growth slowed less than expected in June.

Wall Street will be closely watching the U.S. government’s release of employment data for June on Friday.

Technology and health care stocks accounted for a big share of the benchmark S&P 500 index’s gains Wednesday. Cisco Systems rose 1.7% and Pfizer added 2.1%.

Energy sector stocks, which lost ground along with crude oil prices, were among the few sectors that closed lower. Hess remained in the red. Hess dropped 2.7%.

Delivery service DoorDash fell 7.4% following Amazon’s announcement of a deal with rival delivery service Grubhub.

European markets closed broadly higher.

The euro is at a 20-year low to the dollar on worries over disruptions to energy supplies. European Commission chief Ursula von der Leyen said the 27-nation European Union needs to make emergency plans to prepare for a complete cut-off of Russian gas amid the Kremlin’s war on Ukraine.

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Wall Street capped another choppy day of trading Wednesday with modest gains for the major stock indexes, after investors combed the minutes from the Federal Reserve’s most recent interest rate policy meeting for clues about what the central bank may do next to fight inflation.

The S&P 500 rose 0.4%, its third-consecutive gain, after spending much of the morning and early afternoon wavering between gains and losses. The Dow Jones Industrial Average rose 0.2%, while the the Nasdaq rose 0.3%

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Wall Street rallies again, even as bond market signals worry​

By DAMIAN J. TROISE and ALEX VEIGA

Stocks on Wall Street rallied again Thursday, extending the market’s winning streak to a fourth day and placing the major indexes on pace for weekly gains.

The S&P 500 rose 1.5%. It’s latest gain marks the longest winning streak for the benchmark index since March. The Dow Jones Industrial Average rose 1.1%, while the Nasdaq closed 2.3% higher.

Small-company stocks outpaced the broader market, a signal that some investors remain confident of economic growth. The Russell 2000 rose 2.4%.

Most of the market climbed, and energy-producing companies led the way after oil prices recovered a chunk of their sharp losses from earlier in the week. The bond market is still showing signs of worry about a possible recession, though.

A report on Thursday showed more workers filed for unemployment benefits last week than expected. A report on Friday will show more broadly how the jobs market is doing.

“We still see a host of macro headwinds that suggest a cautious approach is appropriate here,” said Bill Merz, head of capital markets research at U.S. Bank Wealth Management.

The S&P 500 rose 57.54 points to 3,902.62, as roughly three-fourths of the stocks in the index rose. The Dow rose 346.87 points to 31,384 and the Nasdaq rose 259.49 points to 11,621.35. The Russell 2000 gained 42.06 points to 1,769.60.

Companies that benefit the most from a healthy economy led the gains, with technology stocks doing much of the heavy lifting. Apple rose 2.4%.

The energy sector also rose as U.S. crude oil prices climbed 4.3% after falling the last few days. Exxon Mobil rose 3.2%.

“Energy prices have been coming down on fears of a recession, along with a host of other industrial commodities,” said Quincy Krosby, chief equity strategist for LPL Financial. “Obviously, there’s still concern about the economy, there’s still concern about where we’re headed and whether the economic backdrop is going to weaken.”

The major indexes are on pace for weekly gains in what has been turbulent trading over the last several months. The volatility reflects growing worries among investors that the economy is slowing under the weight of surging inflation and sharply higher interest rates, pressures that could tip the economy into a recession.

Despite this week’s rally in the stock market, bond investors continue to signal anxiety over a potential recession. New data Thursday showed that the number of Americans applying for unemployment benefits topped the 230,000 mark for the fifth consecutive week. While claims remain low, last week was the highest level of claims in almost six months.

The yield on the 10-year Treasury rose to 3% from 2.91% late Wednesday. The yield on the two-year Treasury is above the 10-year yield, a relatively rare thing seen by some investors as an ominous sign.

The job market in the U.S. has been a key focus for investors this week as they look for any clues on how inflation is impacting the economy. On Wednesday, the U.S. government reported that employers advertised fewer jobs in May amid signs that the economy is weakening and there are already signs that retailers have pulled back on hiring.

A weakening of the broader job market, which has remained strong through the pandemic recovery, could signal that inflation is cooling off. Investors will get a clearer picture on Friday when the more detailed June jobs report is released.

“That’s what the Federal Reserve wants it to do, they’re actually thinking that their policies are working because they are increasing slack in the labor markets,” said Zachary Hill, head of portfolio management at Horizon Investments. “As we look to tomorrow and think about how markets should be reading the report, seeing a deceleration in the pace of job growth is a positive in a sense.”

Investors are trying to determine whether a recession is on the horizon as the Fed aggressively raises interest rates to temper pervasive inflation.

Businesses are getting squeezed by higher costs because of supply chain problems and have raised prices on everything from food to clothing.

Consumers have been pulling back on spending as inflation puts a tighter squeeze on budgets. Russia’s invasion of Ukraine in February sent energy prices surging in 2022, resulting in record gasoline prices in the U.S. Pain at the pump has only worsened the broader impact from inflation, though there are signs that gasoline prices have begun to recede.

The key concern is that the Fed’s interest rate hikes could go too far in slowing economic growth and actually bring on a recession. After last month’s meeting, the Fed raised its rate by three-quarters of a point to a range of 1.5% to 1.75% — the biggest single increase in nearly three decades — and signaled that further large hikes would likely be needed.

The recession concerns have been weighing heavily on markets. Every major index is in a slump for the year and the benchmark S&P 500 is in a bear market, or down at 20% from its most recent high. The market is not likely going to regain ground until Wall Street gets clearer signals that inflation is cooling.

Markets in Europe ticked higher on a day that British Prime Minister Boris Johnson announced that he was resigning amid a flood of resignations from his Conservative Party’s members.

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Stocks on Wall Street rallied again Thursday, extending the market’s winning streak to a fourth day and placing the major indexes on pace for weekly gains.

The S&P 500 rose 1.5%. It’s latest gain marks the longest winning streak for the benchmark index since March. The Dow Jones Industrial Average rose 1.1%, while the Nasdaq closed 2.3% higher.

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Wall Street ends winning week with mixed close on jobs data​

By STAN CHOE, DAMIAN J. TROISE and ALEX VEIGA

NEW YORK (AP) — Wall Street capped a winning week with a sputtering finish Friday, as stocks waffled following a stronger-than-expected report on the U.S. jobs market.

The S&P 500 slipped 0.1% after earlier flipping between a loss of 0.9% and a gain of 0.4%. Despite its weak finish, the benchmark index delivered just its third winning week in the last 14.

The surprisingly strong jobs report showed that employers are continuing to hire despite worries about a possible recession. However, the hotter the economy remains, the more likely the Federal Reserve is to continue raising interest rates sharply in its fight against inflation.

Treasury yields shot higher immediately after the release of the jobs data, underscoring expectations of Fed rate hikes, but then eased back. The yield on the two-year Treasury jumped as high as 3.15% from 3.03% late Thursday, but it then moderated to 3.11%. The 10-year yield, which influences rates on mortgages and other consumer loans, rose 3.08% from 3% a day earlier.

The Dow Jones Industrial Average slipped 0.1%, while the Nasdaq composite rose 0.1% after swinging between a loss of 1.2% and a 0.6% gain. The technology and other high-growth companies that make up a big chunk of the Nasdaq index have been some of the most vulnerable to rising rates recently. Both indexes also notched a gain for the week, something that’s been rare in recent months as the market’s downturn gained momentum.

“Today we just have a little reversal, because rates popped over 3% on this strong employment report,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.

Wall Street’s key concern centers around the Federal Reserve’s effort to rein in inflation, and the risk its plan could send the economy into a recession.

The central bank has already hiked its key overnight interest rate three times this year, and the increases have become increasingly aggressive. Last month it raised rates by the sharpest degree since 1994, by three-quarters of a percentage point to a range of 1.50% to 1.75%. It was at virtually zero as recently as March.

By making it more expensive to borrow, the Fed has already slowed some parts of the economy. The housing market has cooled in particular as mortgage rates rise due to the Fed’s actions. Other parts of the economy have also shown signs of flagging, and confidence has fallen sharply among consumers as they contend with the highest inflation in four decades.

The hope on Wall Street had been that the recently mixed data on the economy could convince the Federal Reserve to take it easier on rate hikes. This week’s reprieve from spiking prices for oil and other commodities helped strengthen such hopes. But Friday’s jobs report may have undercut them.

The choppy trading Friday comes ahead of a key report Wednesday on inflation at the consumer level. The consumer price index, which in May came in at the highest level since 1981, is projected to show an increase of 8.8% over the 12 months ended in June, according to FactSet.

“I don’t think anybody wants to get super long over the weekend going into the CPI,” Hatfield said.

Higher interest rates slow the economy by design, and the Fed’s intent is to do so enough to force down inflation. It’s a sharp reversal from policy during the pandemic, which was to keep rates low in order to support economic growth. The danger is that rates hikes are a notoriously blunt tool, with long lag times before their full effects are seen, and the Fed risks causing a recession if it acts too aggressively.

“You can’t just raise rates and reduce the balance sheet without it doing the opposite of what it did before,” said Jerry Braakman, chief investment officer of First American Trust. “When you do the reverse, you can expect it will do the opposite as well.”

Other central banks around the world are also raising interest rates and removing emergency plans put in place early in the pandemic to prop up financial markets.

One closely watched signal in the U.S. bond market is continuing to warn of a possible recession. The yield on the two-year Treasury this week topped the yield on the 10-year Treasury and remained that way on Friday. It’s a relatively rare occurrence that some see as a precursor for a recession within a year or two. Other warning signals in the bond market, which focus on shorter-term yields, are not flashing though.

Even if the Fed can pull off the delicate task of crushing inflation and avoiding a recession, higher interest rates push down on prices for stocks, bonds, cryptocurrencies and all kinds of investments in the meantime.

Following Friday’s jobs report, traders are universally betting the Fed will raise the target for its short-term interest rate by at least three-quarters of a percentage point at its meeting later this month, according to CME Group. That would match June’s big move.

A small number of traders are even betting on an increase of a full percentage point. A week ago, no one was predicting that big a move, and some traders were thinking an increase of just half that was the most likely scenario.

All told, the S&P 500 dropped 3.24 points Friday to 3,899.38. The modest decline snapped the index’s four-day winning streak.

The Dow fell 46.40 points to 31,388.15, while the Nasdaq rose 13.96 points to 11,635.31. The Russell 2000 index of small company stocks slipped 0.24 points, or less than 0.1%, to 1,769.36.

In overseas markets, stocks ended mixed or modestly higher.

Tokyo’s main stock market index ebbed following the assassination of former Japanese prime minister, Shinzo Abe, but stayed in positive territory for the day. Abe, 67, died after being shot during a campaign speech Friday in western Japan.

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The Dow fell 46.40 points to 31,388.15, while the Nasdaq rose 13.96 points to 11,635.31. The Russell 2000 index of small company stocks slipped 0.24 points, or less than 0.1%, to 1,769.36.

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Stocks slump on Wall Street amid recession, rate worries​

By DAMIAN J. TROISE and STAN CHOE

NEW YORK (AP) — Wall Street got back to slumping Monday to kick off a week full of updates about how bad inflation is and how corporate profits are handling it.

The S&P 500 fell 1.2% and gave up the majority of its gains from the prior week. The Dow Jones Industrial Average slipped 0.5%, and the Nasdaq composite dropped 2.3%.

Stocks of smaller companies were some of the biggest losers, with the Russell 2000 index down 2.1%, as worries about a possible recession continue to dog markets. The highest inflation in four decades is pushing the Federal Reserve to hike interest rates, which puts the clamps on the economy and pushes downward on all kinds of investments.

Parts of the economy are slowing already, though the still-hot jobs market remains a notable exception.

COVID also continues to drag on the global economy. An outbreak of infections is forcing casinos in the Asian gambling center of Macao to shut for at least a week. That sent Wynn Resorts and Las Vegas Sands down more than 6% apiece for some of the larger losses in the S&P 500.

Twitter lost even more, 11.3%, in the first trading after billionaire Elon Musk said he wants out of his deal to buy the social media platform for $44 billion. Twitter said it will take Musk to court to uphold the agreement.

Other big technology companies were also particularly weak. It’s a continuation of this year’s trend, where rising rates most hurt the investments that soared highest earlier in the pandemic.

The struggles pulled the Nasdaq down 262.71 points to close at 11,372.60. The S&P 500 dropped 44.95 to 3,854.43, and the Dow dipped 164.31 to 31,173.84.

In the bond market, a warning signal continued to flash about a possible recession. The yield on the 10-year Treasury slid to 2.98% from 3.09% late Friday as investors moved dollars into investments seen as holding up better in a downturn. It remains below the two-year Treasury yield, which fell to 3.07%.

Such a thing doesn’t occur often, and some investors see it as a sign that a recession may hit in the next year or two. Other warning signals in the bond market that some see as more reliable, which focus on shorter-term yields, still aren’t flashing. But they also are showing less optimism.

Regardless of whether a recession is imminent, investors likely need to brace for much more volatile markets than they’ve become accustomed to over the last 40 years, strategists at BlackRock said Monday.

For decades, an era of “Great Moderation” smoothed out swings in economic growth and inflation and rewarded investors for “buying the dip” whenever prices dropped. Now, with production constraints driving inflation higher, heavy debt levels weighing on economies and “the hyper-politicization of everything” affecting policy decisions, BlackRock strategists say they’re expecting more volatility and shorter time periods between recessions.

“The Goldilocks option is now off the table,” where stocks and bonds can rise in concert, said Wei Li, global chief investment strategist at BlackRock Investment Institute.

The BlackRock strategists say they prefer stocks over bonds for the long term, but that they’re nevertheless shying away from stocks for the next six to 12 months. One reason is that profit margins for companies are at risk of falling from their historically high levels.

Companies this week are set to begin reporting how their profits fared during the spring. Big banks and other financial companies dominate the early part of the schedule, with JPMorgan Chase and Morgan Stanley set for Thursday. BlackRock, Citigroup and Wells Fargo are among those reporting on Friday.

Expectations for second-quarter results seem to be low. Analysts are forecasting 4.3% growth for companies across the S&P 500, which would be the weakest since the end of 2020, according to FactSet.

Even if companies end up reporting better results than expected, which is usually the case, analysts say the heavier focus will be on what CEOs say about their profit trends for later in the year.

The roughly 19% drop for the S&P 500 this year has been due entirely to rising interest rates and changes in how much investors are willing to pay for each $1 of a company’s profit. So far, expectations for corporate profits have not come down much. If they do, that could lead to another leg downward for stocks.

Many on Wall Street expect those expectations to come down.

The recent rise of the U.S. dollar against other currencies adds another challenge to companies already contending with high inflation and potentially weakening demandaccording to Michael Wilson, equity strategist at Morgan Stanley.

One euro is worth close to $1 now, down 15% from a year earlier, for example. That means sales made in euros may be worth fewer dollars than before.

“The main point for equity investors is that this dollar strength is just another reason to think earnings revisions are coming down over the next few earnings seasons,” Wilson wrote in a report.

Beyond earnings updates, reports this week on inflation will likely dominate trading. On Wednesday, economists expect a report to show that inflation at the consumer level accelerated again last month, up to 8.8% from 8.6% in May.

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Wall Street got back to slumping Monday to kick off a week full of updates about how bad inflation is and how corporate profits are handling it.

The S&P 500 fell 1.2% and gave up the majority of its gains from the prior week. The Dow Jones Industrial Average slipped 0.5%, and the Nasdaq composite dropped 2.3%.

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bigdog

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US stocks slide as earnings reports for companies begin​

By DAMIAN J. TROISE and ALEX VEIGA

Stocks shed early gains and ended broadly lower on Wall Street Tuesday as investors brace for a big week of news on inflation and company earnings reports.

The S&P 500 fell 0.9%, extending its losing streak to a third consecutive day. All of the benchmark index’s 11 company sectors closed in the red.

The Dow Jones Industrial Average slid 0.6%, while the Nasdaq lost 0.9%.

Technology, health care and energy stocks accounted for a big share of the S&P 500′s losses. Bond yields mostly fell, as did energy futures.

Clothing company Gap fell 5% after announcing that CEO Sonia Syngal is stepping down from her role after two years on the job.

The market pullback follows a rare winning week for stocks and comes as investors focus on corporate earnings reports and what they say about how inflation and rising rates are affecting company profits.

“We’ll get more color in the next couple of weeks about how the economy is shaping up, through the lens of companies,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

The S&P 500 fell 35.63 points to 3,818.80. The Dow dropped 192.51 points to 30,981.33, and the Nasdaq slid 107.87 points to 11,264.73.

Smaller company stocks held up better than the broader market. The Russell 2000 slipped 3.83 points, or 0.2%, to 1,728.18.

Energy stocks were among the biggest decliners Tuesday as energy prices fell. The price of U.S. crude oil slumped 7.9%, settling at $95.84 per barrel. Hess fell 3.9%.

Technology stocks also lost ground, weighing heavily on the S&P 500. Pricey values for tech stocks tend to push the broader market higher or lower. Microsoft fell 4.1%.

Several travel-related companies bucked the market decline. United Airlines climbed 8.1%, American Airlines jumped 10% and cruise line operator Carnival rose 7.5%.

Investors remain worried about the possibility the economy will tip into a recession as the Federal Reserve jacks up interest rates to tackle the highest inflation in four decades. Higher interest rates can squelch inflation, but also can choke economic growth and weigh on all kinds of investments.

Against this backdrop, big companies are set to report their latest quarterly results over the next few weeks. Expectations for second-quarter results appear subdued. Analysts are forecasting 5.1% growth for companies across the S&P 500, which would be the weakest since the end of 2020, according to FactSet.

Soft drink and snack maker PepsiCo slipped 0.6% Tuesday after releasing a profit report that easily beat analysts’ estimates.

Delta Air Lines will report its latest results on Wednesday and provide more insight into the travel industry’s recovery from the pandemic. Major banks including JPMorgan Chase and Citigroup are on tap later this week.

The key concerns on Wall Street remain inflation and whether aggressive rate hikes from the Federal Reserve will push the economy into a recession. Investors have had to deal with a turbulent market over the last several months because of those concerns. Major indexes have often swung wildly between gains and losses on any given day and remain in a broad slump.

“The multitude of crosscurrents in the market place suggest that caution is warranted,” Sandven said. Inflation jumped as the economy recovered from the pandemic and demand for goods outpaced supplies. But, inflation heated up in February after Russia invaded Ukraine and sparked a jump in energy prices. Supply chain problems have worsened as China locks down cities in an effort to contain new COVID-19 cases.

The Fed is raising rates in an effort to slow economic growth to help temper the impact from rising inflation. But, the economy is already slowing down as consumers ease up on spending and Wall Street is worried that interest rate hikes could go too far and bring on a recession.

In the bond market, a warning signal continued to flash about a possible recession. The yield on the 10-year Treasury slid to 2.96% from 2.98% late Monday. It remains below the two-year Treasury yield, which fell to 3.04%. Such a thing doesn’t occur often, and some investors see it as a sign that a recession may hit in the next year or two.

Wall Street is keeping a close watch on any indicator that could signal inflation is easing. The Labor Department on Wednesday will release its June report on consumer prices, following with a Thursday release of its June report on prices directly impacting businesses.

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Stocks shed early gains and ended broadly lower on Wall Street Tuesday as investors brace for a big week of news on inflation and company earnings reports.

The S&P 500 fell 0.9%, extending its losing streak to a third consecutive day. All of the benchmark index’s 11 company sectors closed in the red.

The Dow Jones Industrial Average slid 0.6%, while the Nasdaq lost 0.9%.

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bigdog

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Stocks end lower as Wall Street braces for big hike in rates​

By STAN CHOE and ALEX VEIGA

Stocks capped another shaky day on Wall Street with more losses Wednesday, after a highly anticipated report on inflation turned out to be even worse than expected.

The S&P 500 ended 0.4% lower, its fourth consecutive drop, after tumbling as much as 1.6% earlier. The Dow Jones Industrial Average fell 0.7%, while the Nasdaq composite dropped 0.2%, erasing nearly all of an early 2.1% loss.

Markets took a few U-turns through the morning, as has become the norm on Wall Street this tumultuous year. They were following the lead of Treasury yields in the bond market, which initially surged on expectations that Federal Reserve policymakers will hike interest rates drastically to slow the nation’s skyrocketing inflation.

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“They seem to have a green light to raise interest rates with the labor market still in very good shape and inflation remaining well above where they want it to be,” said Tom Hainlin, national investment strategist at U.S. Bank Wealth Management.

Inflation and the Federal Reserve’s response to it have been at the center of Wall Street’s sell off this year. Wednesday’s discouraging data showed that inflation is not only still very high, it’s getting worse.

“For four or five months now, we’ve been counting on peak inflation and we’ve been disappointed consistently,” said John Lynch, chief investment officer at Comerica Wealth Management.

Prices at the consumer level were 9.1% higher last month than a year earlier, accelerating from May’s 8.6% inflation level. That was also worse than economists’ expectations for 8.8%.

The Fed’s main tool to combat inflation is to raise short-term interest rates, which it has already done three times this year. After Wednesday’s inflation report, traders now see it as a lock that the Federal Reserve will hike its key interest rate by at least three-quarters of a percentage point at its next meeting in two weeks.

That would match its most recent increase, which was the biggest since 1994. A growing number of traders are even suggesting the Fed will go for a monster hike of a full percentage point.

The latest inflation data “certainly creates more certainty that the Fed is going to be pretty aggressive in the July meeting,” Hainlin said.

Traders are betting on a 67.8% chance of a full-point hike, up from zero a month ago, according to CME Group.

The risk is that rate hikes are a notoriously blunt tool, one that takes a long time for the full effects to be felt. If the Fed ends up too aggressive with them, it could cause a recession. In the meantime, higher rates push down on prices of all kinds of investments.

“Shock and awe from the Fed might cause a lot of collateral damage to the economy without really providing near-term inflation relief,” said Brian Jacobsen, senior investment strategist at Allspring Global Investments.

“The Fed probably needs to temper people’s expectations about what they can do,” he said.

All told, the S&P 500 fell 17.02 points to 3,801.78. The Dow dropped 208.54 points to 30,772.79, and the Nasdaq lost 17.15 points at 11,247.58.

Smaller company stocks also lost ground. The Russell 2000 slipped 2.15 points, or 0.1%, to 1,726.04.

In the bond market, the two-year Treasury yield rose to 3.13% from 3.05% late Tuesday. It tends to follow expectations for Fed action, and it got as high as 3.22% immediately after the release of the inflation report.

It remains higher than the 10-year yield, which fell to 2.91%, down from 2.95% from late Tuesday. That’s a relatively rare occurrence, and some investors see it as an ominous signal of a potential recession.

The inflation data also sent immediate jolts into stock markets across Europe and for gold, with prices for all of them weakening after the report’s release. U.S. gold for August delivery ended up settling 0.6% higher.

Even with the swings, Wall Street’s reaction was more muted than it was following the last report on inflation. A month ago, the reading on the consumer price index, or CPI, showed an unexpected acceleration in inflation. That dashed some hopes that inflation was peaking, and it sent the S&P 500 down 2.9%.

Since then, parts of the economy have already slowed as a result of inflation and the Fed’s actions combating it, particularly the housing market. Prices for oil and other commodities have also regressed as worries about a recession pull down expectations for demand.

“While some will draw parallels with the shockingly bad May CPI report, the backdrop is markedly different — commodity prices have fallen sharply and we’ve seen clearer signs of an economic slowdown, both of which will contribute to weaker price pressures ahead,” said Michael Pearce, senior U.S. economist with Capital Economics.

Or, as the chief investment officer of global fixed income at BlackRock puts it: “high prices is the cure for high prices.” High inflation is pushing households and businesses to pull back on spending, and the reduced demand should ultimately help pull down inflation, Rick Rieder wrote in a report.

Besides interest rates, which affect how much investors are willing to pay for stocks, investors this week are also getting updates on the other big factor that sets prices on Wall Street: how much profit companies are making.

Delta Air Lines fell 5% after it reported weaker profit for the spring than analysts expected. High prices for jet fuel and a spate of canceled flights in May and June dragged on its results.

Big banks and financial companies are coming up next, as the reporting season gets going for profits made from April through June.

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Stocks capped another shaky day on Wall Street with more losses Wednesday, after a highly anticipated report on inflation turned out to be even worse than expected.

The S&P 500 ended 0.4% lower, its fourth consecutive drop, after tumbling as much as 1.6% earlier. The Dow Jones Industrial Average fell 0.7%, while the Nasdaq composite dropped 0.2%, erasing nearly all of an early 2.1% loss.

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bigdog

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Stocks fall as JPMorgan warning helps send banks lower​

By DAMIAN J. TROISE

NEW YORK (AP) — Stocks closed broadly lower on Wall Street Thursday as JPMorgan Chase opened the latest round of corporate earnings for big banks with weak results and a warning about the economy.

Wall Street is also assessing the latest government reports showing that inflation remains hot and shows no signs of cooling, even as central banks try to loosen its grip on businesses and consumers by hiking interest rates.

The S&P 500 fell 11.40 points, or 0.3%, to 3,790.38. Nearly three out of every four stocks in the benchmark index finished in the red. The Dow Jones Industrial Average fell 142.62 points, or 0.5%, to 30,630.17. The Nasdaq rose 3.60 points, or less than 0.1%, to 11,251.19.

Banks had some of the biggest losses and weighed heavily on the market. JPMorgan Chase fell 3.5% after reporting a sharp drop in earnings for its latest quarter, falling short of forecasts. CEO Jamie Dimon stuck by his warning earlier this summer that a “hurricane” may be headed for the economy.

“I haven’t changed my view at all,” he said in a conference call with journalists. “The negatives I pointed out, the risks in the future, are still the same risks. They’re nearer than they were before.”

Inflation and the Federal Reserve’s fight against it remain key concerns for Wall Street. Inflation at the wholesale level climbed 11.3% in June compared with a year earlier. It is the latest painful reminder that inflation is running hot, following a report on Wednesday that showed prices at the consumer level were 9.1% higher last month than a year earlier.

Pervasive inflation has been squeezing businesses and consumers for months. More importantly for Wall Street, it prompted an aggressive reversal for the Fed on its interest rate policy. The central bank is now raising rates in an effort to slow economic growth and cool inflation, but that has raised concerns that it could go too far and actually cause a recession.

Small-company stocks fell more than the broader market, in another signal that investors are worried about economic growth. The Russell 2000 fell 18.53 points, or 1.1%, to 1,707.51.

Several big technology companies rose and helped offset some of the losses elsewhere in the market. Apple rose 2%.

The yield on the 10-year Treasury, which affects mortgage rates, rose to 2.96% from 2.90% late Thursday. It remains lower than the two-year Treasury, which is at 3.12%. That’s a relatively rare occurrence, and some investors see it as an ominous signal of a potential recession.

The Fed has already raised rates three times this year and traders are increasingly expecting a monster rate hike of a full percentage point at the central bank’s next meeting in two weeks. Traders are betting on a 44% chance of a full-point hike, up from zero a month ago, according to CME Group.

Christopher Waller, a member of the Federal Reserve’s Board of Governors, said Thursday that he would be open to supporting such a move if upcoming economic data points to robust consumer spending.

“We went into this week feeling that the Fed would make a move significant enough to show it had more control” in fighting inflation, said Greg Bassuk, CEO at AXS Investments. “A meaty Fed rate hike alone does not rule out an opportunity for a soft landing, but the window is shrinking.”

Investors have grown increasingly worried as retail sales and other data point to an economy already slowing. That could make it more difficult for the Fed to make a so-called “soft landing,” where it raises rates just enough to cool inflation without causing a recession.

Concerns about the Fed’s rate hikes have prompted Bank of America to forecast a mild recession hitting the economy in the second half of the year and more pain for traders. The benchmark S&P 500 index has already slumped into a bear market, down 20% from its most recent high in January, and likely hasn’t hit bottom yet, according to the bank.

Investors are will get a clearer picture in the coming weeks about how badly inflation is hurting companies. Several more banks are on deck to report earnings Friday, including Citigroup and Wells Fargo, along with insurer UnitedHealth Group.

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Stocks closed broadly lower on Wall Street Thursday as JPMorgan Chase opened the latest round of corporate earnings for big banks with weak results and a warning about the economy.

The S&P 500 fell 11.40 points, or 0.3%, to 3,790.38. Nearly three out of every four stocks in the benchmark index finished in the red. The Dow Jones Industrial Average fell 142.62 points, or 0.5%, to 30,630.17. The Nasdaq rose 3.60 points, or less than 0.1%, to 11,251.19

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bigdog

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Stocks end higher on Wall Street, still down for the week​

By DAMIAN J. TROISE and ALEX VEIGA

Wall Street capped a week of losses with a broad rally for stocks Friday, as investors welcomed solid earnings from big companies and an encouraging report on consumer sentiment and inflation expectations.

A July survey from the University of Michigan showed that inflation expectations have held steady or improved, along with general consumer sentiment. The report was welcome following several government reports this week that showed consumer prices remained extremely hot in June, along with wholesale prices for businesses.

The report also bodes well for investors looking for signs that the Federal Reserve might eventually ease off its aggressive policy to fight inflation.

The S&P 500 rose 1.9%, snapping a five-day losing streak. Still, the gains weren’t enough to pull the benchmark index out of the red for the week.

The Dow Jones Industrial Average rose 2.1% and the Nasdaq gained 1.8%. Smaller company stocks outgained the broader market, sending the Russell 2000 index 2.2% higher. Those indexes also posted losses for the week, however.

“Investors are saying, look, ’we’ve seen this before, where the market goes up smartly one day, only to turn back around the next day,’” said Sam Stovall, chief investment strategist at CFRA.

Technology stocks, banks and healthcare companies made some of the biggest gains. PayPal climbed 6.3%. UnitedHealth Group rose 5.4% after raising its profit forecast for the year following a strong earnings report. Citigroup jumped 13.2% for the biggest gain in the S&P 500 after reporting encouraging financial results.

Bond yields mostly fell. The yield on the 10-year Treasury slipped to 2.92% from 2.96% late Thursday. The yield on the two-year Treasury rose to 3.14% from 3.13% late Thursday.

Inflation and its impact on businesses and consumers remains a key focus for Wall Street. The Federal Reserve has been raising interest rates in an effort to hit the brakes on economic growth, and curtail rising inflation. The Fed has already raised rates three times this year.

Wall Street has been worried that the Fed could go too far in raising rates and actually bring on a recession. Investors have been closely watching economic reports for clues as to how the central bank might react and the latest upbeat consumer sentiment report raises the chance of the Fed softening its current policy.

Traders have eased off of their bets that the Fed will issue a monster rate hike of 1% at its next policy meeting in two weeks. They now see a 30.9% chance of that happening, according to CME Group. That’s down significantly from Thursday. They now see a 69.1% chance of a three-quarters of a percentage point rate hike.

Economic data also shows that retail sales remain strong. A government report showed that retail sales rose 1% in June from May, topping economists’ expectations, while prices for everything from food to clothing rose.

All told, the S&P 500 rose 72.78 points to 3,863.16. The index has resisted dropping below 3,800, noted Stovall.

“Whenever we come down to about 3,800 and we bounce off it it’s a confirmation there are a lot of buyers at that level,” he said. “And we saw that yesterday as the market retested that level only to be pushed higher, and then today with encouraging fundamentals to go along with it.”

The Dow rose 658.09 points to 31,288.26 and the Nasdaq rose 201.24 points to 11,452.42. The Russell 2000 gained 36.87 points to 1,744.37.

Overseas, stocks in Hong Kong and Shanghai fell following a report that showed the Chinese economy shrank by 2.6% compared with the January-March period’s already weak quarter-on-quarter rate of 1.4%. China locked down major cities earlier this year to try and contain COVID-19 cases and more outbreaks this week in China and elsewhere in Asia have raised worries that COVID-19 controls might be restored, on top of existing precautions.

Investors have been reviewing the latest batch of corporate earnings to gain a clearer picture of inflation’s impact on businesses. Banks kicked things off with mixed results this week. Several big companies are on deck for next week, including Johnson & Johnson, Netflix, United Airlines and Twitter.

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Wall Street capped a week of losses with a broad rally for stocks Friday, as investors welcomed solid earnings from big companies and an encouraging report on consumer sentiment and inflation expectations.

The S&P 500 rose 1.9%, snapping a five-day losing streak. Still, the gains weren’t enough to pull the benchmark index out of the red for the week.

The Dow Jones Industrial Average rose 2.1% and the Nasdaq gained 1.8%. Smaller company stocks outgained the broader market, sending the Russell 2000 index 2.2% higher. Those indexes also posted losses for the week, however.

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bigdog

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Wall Street rally fades as corporate profit reports ramp up​

By STAN CHOE and ALEX VEIGA

Stocks closed lower on Wall Street Monday after an early rally evaporated by mid afternoon, marking a choppy start to a week full of updates on the two things that set stock prices: how much profit companies are making and where interest rates are heading.

The S&P 500 fell 0.8% after having been up 1% in the early going, The index broke a five-day losing streak at the end of last week. Gains in energy producers, big retailers and other companies that rely on consumer spending were outweighed by a pullback in health care and technology stocks. Goldman Sachs rose after reporting better profit for the spring than expected.

The Dow Jones Industrial Average fell 0.7% and the Nasdaq composite lost 0.8%.

“It was a pretty big gain earlier today, and it’s all gone,” said Liz Young, head of investment strategy at SoFi.

Young expects the market to remain volatile through July, mainly because of earnings season. Johnson & Johnson, American Airlines and Tesla are among the dozens of S&P 500 companies that are scheduled to issue quarterly snapshots this week.

“This is the first earnings season in the cycle where we’re probably going to get some pretty negative guidance and we’re going to hear about where companies are being squeezed and they’re going to be changing their outlook,” she said.

The S&P 500 fell 32.31 points to 3,830.85. The Dow slid 215.65 points to 31,072.61, and the Nasdaq gave up 92.37 points to 11,360.05. The Russell 2000 index of smaller companies also fell. It dropped 5.96 points, or 0.3%, at 1,738.42.

The afternoon reversal is the latest bout of volatile trading for the market, which has been lurching mostly lower for weeks on worries that the Federal Reserve and other central banks around the world will slam the brake too hard on the economy in hopes of bringing down high inflation. If they’re too aggressive with their interest-rate hikes, they could cause a recession.

“The Fed wants inflation data to come down and it’s not going to retract its claws until that happens,” Young said. “Pretty quickly the narrative is going to shift to, ‘will the Fed go too far?’”

Still, some on Wall Street are seeing signs for at least temporary optimism. Oil prices have come off their highs, though U.S. crude rose 5.1% Monday. A key report released last week also indicated expectations are easing for inflation among households. That could prevent a more vicious cycle from taking root and ease the pressure on the Federal Reserve.

Expectations have come down for how aggressively the Federal Reserve will raise interest rates at its meeting next week. Traders are now betting on a roughly one-in-three chance for a monster hike of a full percentage point, with the majority favoring a 0.75 percentage point increase. As recently as Thursday, the heavy bet was on a hike of a full point.

Economists at Goldman Sachs are among those forecasting a 0.75-point increase, which would match last month’s hike, instead of a more aggressive one. They cited in particular the softening of inflation expectations after Chair Jerome Powell said last month that the Fed pays close attention to them.

Across the Atlantic Ocean later this week, investors expect the European Central Bank on Thursday to raise interest rates for the first time in 11 years to combat inflation. Many investors expect an increase of 0.25 percentage points, “but more is not unthinkable,” economists wrote in a BofA Global Research report.

Interest rates are one of the two main levers that set prices for stocks. The other is corporate profits, which are under threat given high inflation and slowdowns in parts of the economy. For the moment, at least, analysts are still forecasting continued growth.

Earnings season kicked off last week, and banks have dominated the early part of the schedule for reporting how much they earned from April through June.

Goldman Sachs was among the latest to report, and it rallied 2.5% after its profit and revenue were better than analysts expected. Synchrony Financial rose 0.3% after it likewise topped forecasts for profit and revenue.

Bank of America closed essentially flat after it fell short of analysts’ profit expectations. Despite all the worries about a possible recession, Bank of America said its customers’ spending and deposits remain strong.

In markets overseas, Hong Kong’s Hang Seng index surged 2.7% after Chinese media reported that some stalled real estate projects had resumed construction after buyers threatened to stop their mortgage payments. Stocks in Shanghai added 1.6%.

Stocks also rose across much of the rest of Asia and Europe, with Germany’s DAX returning 0.7%.

In the bond market, the yield on the 10-year Treasury rose to 2.98% from 2.96% late Friday. The two-year yield, which rose to 3.17%, is still above the 10-year yield. Some investors see that as an ominous sign that could presage a recession in a year or two.

Underscoring worries about a recession have been recent reports showing slowdowns in parts of the economy because of the Fed’s rate hikes.

The housing market in particular has felt the effect of more expensive mortgage rates. A measure of sentiment among home builders released Monday weakened more than economists expected and sank to its lowest level in more than two years.

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Stocks closed lower on Wall Street Monday after an early rally evaporated by mid afternoon, marking a choppy start to a week full of updates on the two things that set stock prices: how much profit companies are making and where interest rates are heading

The S&P 500 fell 32.31 points to 3,830.85. The Dow slid 215.65 points to 31,072.61, and the Nasdaq gave up 92.37 points to 11,360.05. The Russell 2000 index of smaller companies also fell. It dropped 5.96 points, or 0.3%, at 1,738.42.

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Stocks sweep higher on Wall Street as profit reports roll in​

By STAN CHOE and ALEX VEIGA

The stock market had its best day in more than three weeks Tuesday as more companies reported how much profit they made during the spring.

The S&P 500 climbed 2.8% after a powerful tide carried 99% of the stocks in the index higher. The Dow Jones Industrial Average rose 2.4% and the Nasdaq composite roared 3.1% higher.

Smaller company stocks rose even more, sending the Russell 2000 index 3.5% higher.

Stocks had dropped roughly 20% this year on worries about rising interest rates and high inflation, which puts an even brighter spotlight than usual on how much profit companies are making. If earnings hold up, it would provide a major support for markets. But if CEOs warn about troubles ahead, another tumble may be on the way.

“What we’re all enjoying today is a bit of a relief rally,” said Keith Buchanan, portfolio manager at Globalt Investments. “The tone with the latest earnings from the large banks has not been increasingly negative and investor sentiment is at record lows, so it doesn’t take very much to have an exciting, upside day.”

More types of companies are reporting how much they earned during the spring, broadening out from the banks that dominated the earliest part of the reporting season.

Toy company Hasbro rose 0.7% after it reported stronger profit than analysts expected. Oilfield services provider Halliburton added 2.1% after its profit and revenue topped forecasts. Netflix jumped 8% in after-hours trading after the company reported better-than expected results and a smaller subscriber loss than analysts had feared.

Twitter rose 2.8% after a court in Delaware agreed to quickly schedule a lawsuit that could force billionaire Elon Musk to make good on his agreement to buy the company.

IBM, though, fell 5.2% despite reporting stronger revenue and earnings than expected. The company’s profit margins fell short of some analysts’ expectations, and concerns are rising about the effect of the dollar’s recent strength against other currencies. While a stronger dollar helps limit inflation at home, it can also undercut the value of sales made abroad by U.S. companies.

The dollar’s value eased a bit against other currencies Tuesday, which allayed some fears for the market. So too, counterintuitively, may have a report that showed an extreme level of pessimism among investors.

Expectations for economic growth and profits have plunged, according to the latest results from Bank of America’s monthly survey of global fund managers. That has them sitting on their highest cash levels since 2001 and their lowest allocations to stocks since 2008.

“Full capitulation” is how Michael Hartnett, chief investment strategist, called it in a a BofA Global Research report. Contrarian investors see such dire levels of pessimism as an encouraging signal, which could presage better times ahead if everyone who was going to sell has already.

Given all those fears, though, big swings have become routine on Wall Street recently. The S&P 500 has been flip-flopping between weekly gains and losses over the last month, after a rough run where it dropped in 10 of 11 weeks. The swings have even hit hour to hour, with early morning gains quickly evaporating by the afternoon. On Monday, an early 1% gain gave way to a 0.8% loss.

On Tuesday, the S&P 500 ended 105.84 points higher at 3,936.69. The Dow jumped 754.44 points to 31,827.05, and the Nasdaq rose 353.10 points to 11,713.15. The Russell 2000 picked up 60.91 points to 1,799.32.

On Thursday, the European Central Bank is expected to raise interest rates for the first time in 11 years in hopes of knocking down high inflation.

The Federal Reserve has already raised rates three times this year, and by increasing amounts each time. It will announce its next increase next week, and the only question among investors is whether it will go with another increase of 0.75 percentage points or a colossal hike of a full point.

The yield on the two-year Treasury, which tends to track expectations for Fed action, rose to 3.24% from 3.17% late Monday. The 10-year yield rose to 3.02% from 2.96%.

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The stock market had its best day in more than three weeks Tuesday as more companies reported how much profit they made during the spring.

The S&P 500 climbed 2.8% after a powerful tide carried 99% of the stocks in the index higher. The Dow Jones Industrial Average rose 2.4% and the Nasdaq composite roared 3.1% higher.

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bigdog

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Wall Street closes higher, adding to gains after big rally​

By STAN CHOE and ALEX VEIGA

A choppy day on Wall Street ended with more gains for stocks Wednesday, as investors welcomed another batch of encouraging profit reports from U.S. companies.

The S&P 500 rose 0.6%, tacking more onto its big gains from a day earlier, when the benchmark index soared 2.8%, its best day in weeks.

The Dow Jones Industrial Average managed a modest 0.2% gain after recovering from a midafternoon pullback. The Nasdaq composite climbed 1.6%.

With the latest move higher the major indexes are on pace for a solid weekly gains.

“It’s not exactly the most robust day, but it’s nice to follow up on a day like yesterday,” said Ross Mayfield, investment strategist at Baird. “It feels like over the past couple of months good days have given it all back the very next day.”

Profit reporting season is ramping up, with more types of industries offering details about how high inflation and worries about a possible recession are affecting their customers. A lot is riding on whether they can continue to deliver healthy earnings.

Stocks tumbled roughly 20% from their highs this year because of rising interest rates, and proof that profits can remain strong would provide a big support for markets. On the other hand, warnings about upcoming weakness could kick off another leg downward.

For now, traders appear to be encouraged by what they’re hearing from companies, especially big banks, as the reporting season gets going.

“It wasn’t universal, but the broad takeaway from the big banks earlier is the consumer is doing alright, the data has confirmed that,” Mayfield said.

Companies so far have been mostly topping profit expectations this reporting season, as is usually the case, though the most recent reports were mixed.

Nasdaq, the company behind its namesake trading exchange, jumped 6.1% after delivering stronger profit and revenue than Wall Street expected. Omnicon Group, the advertising and public-relations company, rose 3.9% following better-than-expected earnings. Comerica, the Dallas-based financial services company, added 1.6% after it also reported stronger-than-expected results.

Netflix climbed 7.4% higher after it said it lost fewer subscribers during the spring than expected. It, though, remains the worst stock in the S&P 500 for the year, down by nearly two thirds.

Beyond Netflix, several other tech-oriented companies made strong gains. Amazon climbed 3.9%, and Nvidia jumped 4.8%, which helped boost the tech-heavy Nasdaq composite index.

On the losing end was Baker Hughes, which tumbled 8.3% after it reported weaker results for the spring than analysts expected. Northern Trust fell 4% after its profit fell short of forecasts.

All told, the S&P 500 rose 23.21 points to 3,959.90. The Dow added 47.79 points to 31,874.84. The Nasdaq rose 184.50 points to 11,897.65.

Smaller company stocks also gained ground. The Russell 2000 rose 28.62 points, or 1.6%, at 1,827.95.

In Europe, stocks slipped amid worries about whether Russia would restrict supplies of natural gas headed for the region after some maintenance on a key pipeline is scheduled to end Thursday. Germany’s DAX fell 0.2%, and French stocks dipped 0.3%.

The continent is also preparing for the first increase in interest rates by the European Central Bank in 11 years on Thursday, as it tries to beat back inflation.

The U.S. Federal Reserve has already hiked rates three times this year, by increasing margins each time. When it meets next week, investors say the only question is if it raises its key rate by another 0.75 percentage points or opts for a mega-hike of a full percentage point.

Expectations have recently been tilting toward the less aggressive option, with traders seeing better than a two-in-three chance for a 0.75-point increase, according to CME Group. That could mean less pressure on stocks, particularly tech stocks and others seen as the market’s more expensive, which have swung sharply with changes in forecast on what the Fed will do.

Such increases to rates make borrowing more expensive, which slows the economy. The hope is that the Federal Reserve and other central banks can deftly find the middle ground where the economy slows enough to whip inflation but not enough to cause a recession.

Some parts of the economy are already slowing because of the rate hikes, particularly the housing industry. A report on Wednesday morning showed that sales of previously occupied homes weakened last month by more than economists expected. Higher mortgage rates are dragging on the industry, along with high prices for homes.

In the bond market, the yield on the two-year Treasury, which tends to follow expectations for the Fed’s actions, edged up to 3.25% from 3.24% late Tuesday. The 10-year yield rose to 3.03% from 3.01% late Tuesday.

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A choppy day on Wall Street ended with more gains for stocks Wednesday, as investors welcomed another batch of encouraging profit reports from U.S. companies.

All told, the S&P 500 rose 23.21 points to 3,959.90. The Dow added 47.79 points to 31,874.84. The Nasdaq rose 184.50 points to 11,897.65.

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bigdog

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Stocks end higher as Wall Street’s winning week rolls on​

By STAN CHOE and ALEX VEIGA

Stocks on Wall Street closed higher Thursday, building on their winning week, as investors sifted through a deluge of news about the economy, interest rates and corporate profits.

The S&P 500 rose 1% after shaking off an early stumble, returning to its highest level in six weeks. The Dow Jones Industrial Average also recovered from a midafternoon slide to end 0.5% higher, while the Nasdaq composite rose 1.4% as Tesla and technology stocks led the market.

Much of Wall Street’s focus was on Europe, where a yearslong experiment with negative interest rates came to a close. In the United States, reports suggested the economy is slowing more than expected, while a better-than-expected profit report from Tesla headlined a mixed set from the nation’s biggest companies. Stocks briefly lost ground after President Joe Biden tested positive for COVID.

At the center of this year’s sell-off for financial markets has been the world’s punishingly high inflation, and the moves made by central banks to squash it. On Thursday, the European Central Bank surprised markets when it raised interest rates by more than expected, its first increase in 11 years.

“I was trading right when the ECB (news) came out and it actually caused long-term bonds to rally,” said Jay Hatfield, CEO of Infrastructure Capital Advisors.

Investors also bid up stock prices. The S&P 500 rose 39.05 points to 3,998.95. The latest gains extended the benchmark index’s winning streak to a third day.

The Dow rose 162.06 points to 32,036.90, while the Nasdaq added 161.96 points at 12,059.61. The major indexes are all on pace for a weekly gain.

Smaller company stocks also rose. The Russell 2000 gained 8.74 points, or 0.5%, at 1,836.69.

As with the U.S. Federal Reserve, which is set to raise rates next week for a fourth time this year, the hope is that higher rates will slow the economy enough to beat back high inflation. The risk is that higher rates push down on investment prices, and too-aggressive hikes could cause a recession.

In the U.S., some areas of the economy have already begun to soften.

The highest number of workers filed for unemployment benefits last week in eight months, though it remains low compared with history. A separate report released Thursday morning showed manufacturing in the mid-Atlantic region weakened by significantly more than economists expected.

The discouraging data helped pull Treasury yields lower and could steer the Federal Reserve toward less aggressive hikes on interest rates. That in turn could help support stocks.

The two-year Treasury yield, which tends to move with expectations for the Fed, slumped to 3.09% from 3.25% late Wednesday. Forecasts among traders for what the Federal Reserve will do at its meeting next week have tilted toward an increase of 0.75 percentage points and away from a colossal hike of a full percentage point.

The 10-year yield, which influences mortgage rates, fell to 2.90% from 3.03%.

The primary reason stocks have rallied this week on Wall Street has been strong profit reports from big U.S. companies. If they can deliver continued growth despite high inflation, that would prop up one of the two main levers that set stock prices. The other depends on where interest rates go.

Tesla climbed 9.8% in the first trading after the electric-vehicle maker reported results for the spring that were better than analysts expected. It was the biggest gainer in the S&P 500.

Steelmaker Nucor jumped 9.1% after its results topped forecasts. Philip Morris International, the tobacco company, rose 4.2% after reporting stronger profit than expected.

On the losing side were airlines following some disappointing reports.

United Airlines tumbled 10.2% after its profit and revenue fell short of expectations. It also scaled back its plans for growth later this year. American Airlines fell 7.4% after it reported weaker earnings than expected, though its revenue topped forecasts.

AT&T sank 7.6% even though it reported better profit and revenue than Wall Street forecast. It cut its forecast for the amount of cash it will generate this year.

Stocks of energy companies also fell as the price of U.S. crude oil settled 3.5% lower.

European stocks ended mixed, with several events keeping the continent in the market’s spotlight beyond the European Central Bank’s momentous moves.

A key pipeline carrying natural gas into the region reopened Thursday, though worries continue that Russia may restrict supplies to punish allies of Ukraine. In Italy, Premier Mario Draghi resigned after his ruling coalition fell apart. That adds more uncertainty as Europe contends with the war in Ukraine, high inflation and the potential for trouble in Europe’s bond markets.

In Asia, Tokyo’s Nikkei 225 rose 0.4% after the Bank of Japan announced no major policy changes after a two-day meeting, as was widely expected. It’s been a holdout in the global rush to raise interest rates.

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Stocks on Wall Street closed higher Thursday, building on their winning week, as investors sifted through a deluge of news about the economy, interest rates and corporate profits.

The S&P 500 rose 1% after shaking off an early stumble, returning to its highest level in six weeks. The Dow Jones Industrial Average also recovered from a mid-afternoon slide to end 0.5% higher, while the Nasdaq composite rose 1.4% as Tesla and technology stocks led the market.

The Dow rose 162.06 points to 32,036.90, while the Nasdaq added 161.96 points at 12,059.61. The major indexes are all on pace for a weekly gain.

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bigdog

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Slump for tech chops off chunk of Wall Street’s winning week​

By STAN CHOE

NEW YORK (AP) — Stocks slipped Friday, giving back some of their gains from earlier in the week as worries brewed about the global economy and prospects for profits at big internet companies.

The S&P 500 lost 0.9% to break a three-day rally that had carried Wall Street to its highest level in six weeks. The Nasdaq composite led the market lower with a 1.9% drop following worse-than-expected profit reports from Snap, Seagate Technology and other tech-oriented companies.

The Dow Jones Industrial Average held up better, slipping a more modest 0.4%. That was in large part because constituent American Express gave an encouraging earnings report and said its cardholders were spending more.

Sandwiched between last week’s dispiriting report on inflation and next week’s decision by the Federal Reserve on interest rates, the S&P 500 still delivered its best week in a month following a collection of mostly better-than-expected reports on corporate profits. Falling yields in the bond market also helped, easing the pressure on stocks after expectations for rate hikes by the Fed sent yields soaring much of this year.

On Friday the two-year Treasury yield tumbled again, to 2.98% from 3.09% late Thursday and from 3.14% a week ago, on worries about the economy. A report Friday morning indicated U.S. business activity may be shrinking for the first time in nearly two years, with service industries particularly weak.

“Manufacturing has stalled and the service sector’s rebound from the pandemic has gone into reverse, as the tailwind of pent-up demand has been overcome by the rising cost of living, higher interest rates and growing gloom about the economic outlook,” Chris Williamson, chief business economist at S&P Global Market Intelligence said in a statement accompanying the survey data.

Similar reports earlier in the morning also suggested weakness in Europe, underscoring how fragile the global economy is as central banks jack up interest rates in order to whip inflation. Higher rates make economic conditions more difficult, and too-aggressive hikes could cause a recession.

Friday’s reports are the latest to show parts of the economy are slowing more than expected. While that raises the threat of a recession, it also has traders ratcheting back expectations for the Federal Reserve’s aggressiveness next week. Instead of a full percentage point, traders now see an increase in rates of 0.75 percentage point as the most likely outcome.

The 10-year Treasury yield fell to 2.76% from 2.91% late Thursday.

In the stock market, the company behind the Snapchat app tumbled 39.1% after it reported a worse loss and lower revenue for the spring than Wall Street forecast.

The weakness for Snap could mean pressure on other companies that depend on internet advertising, which also happen to be among Wall Street’s most influential stocks. The parent companies of both Facebook and Google are scheduled to report their earnings next week. The pair fell 7.6% and 5.6% respectively on Friday, accounting for two of the heaviest weights on the S&P 500.

The S&P 500 lost 37.32 points to close at 3,961.63. The Dow fell 137.61 to 31,899.29, and the Nasdaq fell 225.50 to 11,834.11.

Adding to the pain for tech, data storage company Seagate Technology lost 8.1%. It said anti-COVID measures in Asia and slowing global economic conditions last quarter hit its results, which fell short of forecasts.

Verizon dropped 6.7% after its profit fell short of expectations, though its revenue squeaked past. It also cut its forecast for earnings this year.

On the winning side was American Express, which rose 1.9% after it delivered better profit for the spring than analysts expected. It said customers spent more on travel and entertainment in April than they did before the pandemic, the first time that’s happened.

The encouraging data bolstered some recent comments from CEOs at big banks, who said their customers appear to be in solid financial shape despite all the worries about inflation and the economy.

Despite Friday’s drops for Wall Street, the S&P 500 still rose 2.5% for the week.

Besides the easing of Treasury yields through the week, dropping prices for crude oil and other commodities also provided some relief on the inflation front. They add to some signals suggesting inflation may be close to peaking, such as easing expectations for inflation in future years, said Nate Thooft, senior portfolio manager at Manulife Investment Management.

“Inflation is the most important thing,” he said. “It’s not earnings, it’s not the Fed, it’s not interest rates themselves. It’s the uncertainty of inflation.”

“To me, as soon as you see real evidence that inflation is stabilizing and improving, all the other things also become less problematic,” he said. The war in “Ukraine is separate and off in the corner, but all the others are related, and the epicenter is inflation.”

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bigdog

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Stocks slipped Friday, giving back some of their gains from earlier in the week as worries brewed about the global economy and prospects for profits at big internet companies.


The S&P 500 lost 0.9% to break a three-day rally that had carried Wall Street to its highest level in six weeks. The Nasdaq composite led the market lower with a 1.9% drop following worse-than-expected profit reports from Snap, Seagate Technology and other tech-oriented companies.

The Dow Jones Industrial Average held up better, slipping a more modest 0.4%. That was in large part because constituent American Express gave an encouraging earnings report and said its cardholders were spending more.

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bigdog

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Stocks closing mixed; Investors brace for Fed meeting​

By ALEX VEIGA

Wall Street capped a choppy day of trading with a mixed finish for stock indexes Monday, as investors brace for another sharp interest rate hike by the Federal Reserve this week as the central bank combats inflation.

The S&P 500 edged up 0.1% after fluctuating between gains and losses. The Dow Jones Industrial Average rose 0.3%, while the tech-heavy Nasdaq Composite fell 0.4%.

Smaller company stocks fared better than the broader market, sending the Russell 2000 0.6% higher.

The major indexes are coming off solid gains last week following a mix of mostly better-than-expected reports on corporate profits. Falling yields in the bond market also helped, easing the pressure on stocks after expectations for rate hikes by the Fed sent yields soaring much of this year.

On Wednesday, most economists expect the Fed to announce a three-quarter percentage point hike in its short-term rate, a second consecutive hefty increase that it hasn’t otherwise implemented since 1994. It would put the Fed’s benchmark rate in a range of 2.25% to 2.5%, the highest since 2018.

Wall Street will closely watch a news conference by Fed Chair Jerome Powell on Wednesday to get a sense of policymakers’ next steps.

“The only question is will Powell sound a little less hawkish in his press conference, which could allow the market to continue to breathe a sigh of relief,” said Sam Stovall, chief investment strategist at CFRA.

The U.S. economy is slowing, but healthy hiring shows it isn’t yet in recession, Treasury Secretary Janet Yellen said Sunday on NBC’s “Meet the Press.” She spoke ahead of a slew of economic reports due this week that will shed light on an economy currently besieged by rampant inflation.

Since the Fed last met in June, the government has reported that inflation accelerated to a 9.1% annual rate, the most since 1981.

Still, some early signs suggest that inflation may be cooling from red-hot levels. Auto club AAA said on its website as of Monday that the average price of a gallon of regular gas is $4.36 per gallon. That’s down 16 cents from a week ago, and 55 cents cheaper than late June, when the average price was $4.91 per gallon. Crude oil prices have fallen nearly 10% this month alone.

Even so, elevated inflation is increasingly prompting consumers to reprioritize their spending.

Walmart’s shares fell nearly 10% in after-hours trading Monday after the retail giant lowered its profit outlook for the second quarter and full year. The company blamed surging inflation on basics like food that are forcing shoppers to cut back on discretionary items, particularly clothing, that carry higher profit margins.

Outside of the Fed meeting, the week’s highest-profile report will likely be Thursday, when the Commerce Department releases its first estimate of the economy’s output in the April-June quarter. Some economists forecast it may show a contraction for the second quarter in a row. The economy shrank 1.6% in the January-March quarter. Two straight negative readings is informally considered a recession.

On Wall Street, the S&P 500 rose 5.21 points to close at 3,966.84 Monday. The Dow gained 90.75 points to 31,990.04, and the Nasdaq fell 51.45 points to 11,782.67. The Russell 2000 added 10.89 points to 1,817.77.

Energy companies, banks and health care stocks helped lift the market Monday. Exxon Mobil rose 3.3% and Bank of America added 0.9%. UnitedHealth Group gained 1.5%.

Losses by technology and communications stocks kept indexes’ gains in check. Chipmaker Nvidia fell 1.7% and Meta closed 1.6% lower.

Restaurant chains, retailers and other companies that rely on direct consumer spending also fell. Olive Garden owner Darden Restaurants dropped 2.1%, while Dollar Tree fell 2.1%.

World Wrestling Entertainment jumped 8.4% after CEO Vince McMahon retired Friday amid an investigation into alleged misconduct.

Weber slumped 12.6% after the Illinois-based grill maker announced the departure of CEO Chris Scherzinger. It also pulled its 2022 forecast and suspended its dividend.

Newmont slid 13.2% for the biggest decline in the S&P 500 after the gold miner’s second-quarter earnings fell sharply from a year earlier amid higher costs and weaker gold prices.

Bond yields rose. The two-year Treasury yield, which tends to move with expectations for the Fed, rose to 3.04% from 2.97% late Friday. The 10-year yield, which influences mortgage rates, rose to 2.81% from 2.78%.

Earnings were mostly quiet, but pick up later this week when technology heavyweights like Apple, Meta, Microsoft and Amazon all report their results. Other big companies reporting this week include Coca-Cola and McDonald’s, where investors may look to see the impact of inflation on these inflation-conscious, consumer-facing companies.

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Wall Street capped a choppy day of trading with a mixed finish for stock indexes Monday, as investors brace for another sharp interest rate hike by the Federal Reserve this week as the central bank combats inflation.

The S&P 500 edged up 0.1% after fluctuating between gains and losses. The Dow Jones Industrial Average rose 0.3%, while the tech-heavy Nasdaq Composite fell 0.4%.

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