The S&P 500 still closed out its first winning week in the last three thanks in part to reports showing companies made even fatter profits at the end of 2024 than analysts expected. They’ve helped the market power through a range of worries centered on higher interest rates and stubborn inflation.
Airbnb climbed 14.4% after reporting stronger profit for the latest quarter than analysts expected as customers booked more nights on its platform. Wynn Resorts jumped 10.4% after likewise topping earnings expectations, thanks in part to strength for its Las Vegas operations.
On the losing side of Wall Street was Applied Materials, which dropped 8.2%. The company, whose products help make semiconductor chips, displays and other tech, also reported stronger profit for the latest quarter than analysts expected. But it gave a forecasted range for upcoming revenue whose midpoint fell short of Wall Street’s expectations.
All told, the S&P 500 slipped 0.44 to 6,114.63. The Dow Jones Industrial Average dipped 165.35 points to 44,546.08, and the Nasdaq composite rose 81.13 to 20,026.77.
In the bond market, Treasury yields fell after a report said sales at U.S. retailers weakened by much more last month than economists expected. Bad weather, including bitingly cold temperatures in the South and devastating wildfires in California, may have helped keep shoppers away from stores and auto dealerships.
The hope among investors has been for economic data to remain at a Goldilocks level, where it’s not so weak that it raises worries about a downturn but not so strong that it creates upward pressure on inflation.
This past week featured a couple disappointing reports that showed inflation unexpectedly accelerated last month. Besides squeezing tighter on U.S. households' budgets, such stubbornly high inflation is likely to keep the Federal Reserve on hold for a while when it comes to providing relief through lower interest rates.
Inflation may feel more upward pressure from tariffs that President Donald Trump has announced recently. So far, though, the U.S. stock market has taken such threats in stride. The belief is that Trump is using tariffs as a tool for negotiation, and he may ultimately avoid triggering a punishing global trade war in order to prevent damage to the U.S. stock market and economy.
His most recent tariff announcement, for example, won’t take full effect for at least several weeks. That leaves time for Washington and other countries to negotiate and hopefully lessen the ultimate shock.
“Tariffs on Chinese goods have gone into effect,” said Brian Jacobsen, chief economist at Annex Wealth Management. “All of the other things that have been discussed — reciprocal tariffs, steel and aluminum tariffs, and tariffs on Canada and Mexico — haven’t actually gone into effect, yet. That opens the door the negotiations.”
The market’s remarkable equanimity, of course, could be dangerous if things don’t go according to Wall Street’s expectations, or if it emboldens Trump to make even more forceful moves.
In the bond market, the yield on the 10-year Treasury fell to 4.47% from 4.54% late Thursday. It's been swinging sharply since the Federal Reserve began cutting its main interest rate sharply from September intending to make borrowing cheaper, help the economy and boost prices for stocks, bonds and other investments.
The 10-year yield has been mostly climbing since then, in the opposite direction the Fed has taken short-term rates, as the U.S. economy has remained solid and as worries built about tariffs, increasing deficits and other potential policies that could goose inflation along with economic growth.
The Fed warned at the end of 2024 it may not cut rates by as much in 2025 because of worries about inflation staying stubbornly high. Its goal is to keep inflation at 2%, and lower rates can give inflation more fuel.
In stock markets abroad, indexes were mixed across Europe and Asia.
Hong Kong’s Hang Seng surged 3.7% for one of the biggest moves. Technology stocks were particularly strong, including big rallies for video games firm Tencent, smartphone maker Xiaomi and e-commerce firm Alibaba.
___ AP Writers Matt Ott and Zen Soo contributed.