NEW YORK — On Thursday, U.S. stock markets experienced a mixed day, reacting to various earnings reports from major corporations such as Morgan Stanley and UnitedHealth Group. The S&P 500 Index saw a slight increase of 0.1% during midday trading after fluctuating between minor gains and losses. Meanwhile, the Dow Jones Industrial Average had dropped by 43 points, or 0.1%, by 11 a.m. Eastern time, and the Nasdaq composite was also down by 0.1%.
Following a positive surge the previous day, fueled by optimism over an inflation report that might lead the Federal Reserve to implement more interest rate cuts this year, stocks appeared steadier. Treasury yields remained relatively stable in the bond market, reflecting the mixed variety of economic data released on Thursday.
One economic report revealed that U.S. retail sales growth was weaker than anticipated last month. Additionally, an increased number of U.S. workers applied for unemployment benefits during that week, while another report indicated that manufacturing in the mid-Atlantic region unexpectedly returned to growth. Collectively, these reports suggest that while the U.S. economy is not facing a recession, there are signs of deceleration which could help alleviate inflationary pressures.
In recent weeks, the stock market has displayed considerable volatility, as economic reports have caused traders to adjust their expectations regarding the Federal Reserve’s interest rate policies for the next year. When inflation concerns lessen, the market has seen a rise in expectations for potential rate cuts, leading to lower Treasury yields and higher stock prices. In contrast, when inflation emerges as a greater concern—whether due to a robust economy or prospective actions from President-elect Donald Trump—Treasury yields tend to rise and stock prices generally decline.
On Thursday, Treasury yields remained largely stable. The yield on the 10-year Treasury note decreased to 4.62% from 4.66% at the close of trading on Wednesday, fluctuating throughout the morning but staying well below 4.79%, which was its level earlier in the week. The two-year Treasury yield dipped to 4.24% from 4.27%, compared to 4.37% just two days prior.
Despite being higher than the previous autumn’s levels, elevated Treasury yields can exert downward pressure on stock prices unless companies manage to deliver corresponding increases in profits. On Wall Street, Morgan Stanley’s shares rose by 2.4% after reporting quarterly earnings that surpassed analysts’ expectations. CEO Ted Pick highlighted improvements in investment banking, noting that robust financial markets boosted total client assets across its wealth and investment management sectors to approximately $7.9 trillion.
This positive performance followed strong earnings reports from several banks the prior day, including Citigroup, Goldman Sachs, and Wells Fargo. However, Bank of America also announced a better-than-expected profit on Thursday, but its stock experienced a slight decline, falling 1%. In contrast, U.S. Bancorp faced significant losses, dropping 6.6% after it posted earnings and revenue that lagged behind analysts’ projections.
Additionally, UnitedHealth Group’s stock decreased by 4.9%. Although it reported a stronger-than-expected profit, the revenue fell short of forecasts, compounded by unexpected increases in medical costs. This report marked the company’s first significant financial update since the shocking incident involving one of its executives outside a hotel in New York City earlier last month.
Internationally, stock indices in Europe and Asia saw gains across the board. Notably, France’s CAC 40 climbed 1.8%, South Korea’s Kospi rose by 1.2%, and Hong Kong’s Hang Seng also increased by 1.2%. Taiwan Semiconductor, a leading computer chip manufacturer, announced a remarkable 57% increase in profits last quarter, propelled by the artificial intelligence sector amid ongoing trade and technology tensions between the U.S. and China. The company’s U.S.-traded stock surged by 5.2%, helping to boost shares of semiconductor-related companies; KLA experienced an 8.6% rise, and Lam Research’s shares increased by 8.2%.
