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  • Writer's pictureThe San Juan Daily Star

Wall Street Falls With Interest Rates, Earnings in Focus

Wall Street’s main indexes fell on Monday, pressured by rising Treasury yields after Federal Reserve Chair Jerome Powell pushed back firmly against market speculations of imminent rate cuts, while investors assessed earnings from corporate America.


In an interview aired on Sunday, Powell said more evidence on a sustainable downtrend in inflation was needed to warrant lower rates, while Minneapolis Fed President Neel Kashkari wrote in an essay published on Monday that a resilient economy could defer rate cuts for some time.


Fresh data from the Institute for Supply Management showed the U.S. services sector’s growth picked up in January, with a measure of input prices rising to an 11-month high.


This added to doubts about when rates would be lowered already kindled by Friday’s data signaled the labor market’s resilience in the face of tight credit conditions.


And putting additional pressure on stocks was U.S. Treasury yield increases, with those on 30-year notes jumping to 4.35%. [US/]


“ There’s more realization the Fed is not going to start cutting in March. Powell was very adamant about that. You saw some of the other Fed governors out today reiterating they just need more data in the wake of how hot the job numbers were on Friday, and not just Friday’s report, but the revisions to prior months,” said Carol Schleif, chief investment officer at BMO family office in Minneapolis, MN.


“The market had gotten way out over its skis, especially coming out of November, December,” Schleif said, adding that she was “not viewing this as the start of a major pullback” but rather an opportunity for investors with cash on the sidelines.


Monday’s decline follows record high closing levels in the benchmark S&P 500 and the blue-chip Dow on Friday, boosted by gains in Meta Platforms and Amazon.com after solid financial results.


At 02:16 p.m. the Dow Jones Industrial Average fell 235.98 points, or 0.61% , to 38,418.44, the S&P 500 lost 11.80 points, or 0.24%, to 4,946.81 and the Nasdaq Composite lost 29.05 points, or 0.19%, to 15,599.90.


The S&P 500 materials sector was the biggest sector decliner, down 2.4%, dragged down by a 14.7% decline in Air Products after the industrial gas manufacturer forecast 2024 profit below estimates. Technology and healthcare were the biggest gainers, up 0.5%.


Results were in from nearly half of the S&P 500 firms and fourth-quarter earnings estimates were improving sharply, with about 80% of the reports beating expectations, according to LSEG data on Friday.


“Mostly earnings season has been pretty mixed bag. It’s been more stock specific than industry specific,” said BMO’s Scheif.


Caterpillar rose 2.2%, hitting a record high after posting a higher quarterly profit, while Estee Lauder surged 12.3% as the MAC lipstick maker aims to cut about 3% to 5% of its workforce.


Boeing dropped 1.7% after saying a new quality glitch in some 737 MAX planes would delay some deliveries.


Tesla dropped 3.4% to a near one-year low after Piper Sandler slashed the stock’s price target and on a report that German software company SAP will no longer source its company cars from the EV maker.


Nvidia advanced 4%, hitting a record high following a price-target raise by Goldman Sachs.


Catalent soared 9.4% on Novo Nordisk parent Novo Holdings’ plans to buy the contract drugmaker in an $11.5-billion all-cash deal.


Declining issues outnumbered advancers by a 4.6-to-1 ratio on the NYSE. There were 108 new highs and 109 new lows on the NYSE.


On the Nasdaq 1,129 stocks rose and 3,076 fell as declining issues outnumbered advancers by about a 2.7-to-1 ratio.


The S&P 500 posted 24 new 52-week highs and 10 new lows while the Nasdaq recorded 67 new highs and 188 new lows.

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