NEW YORK — On Thursday, U.S. stock markets experienced a slight downturn, influenced by a mixed bag of earnings results from major companies like Morgan Stanley and UnitedHealth Group.
The S&P 500 index dipped by 0.2%, oscillating between minor gains and losses throughout the trading session. Despite more stocks rising than falling in the index, declines in major entities, such as Tesla, had a more significant impact overall.
The Dow Jones Industrial Average dropped 68 points, equivalent to a 0.2% fall, while the Nasdaq composite experienced a steeper decline of 0.9%.
These relatively modest fluctuations in the stock market came on the heels of a significant rise on Wednesday, which was fueled by optimistic expectations regarding an encouraging inflation report that might lead the Federal Reserve to enforce further interest rate cuts within the year. The bond market also reflected stability, with Treasury yields remaining relatively steady after mixed economic news surfaced on Thursday.
One report indicated that retail sales growth in the U.S. for the previous month fell short of economists’ projections. In another report, an increase in unemployment benefit claims was noted, alongside an unexpected recovery in manufacturing output in the mid-Atlantic region.
Collectively, these reports imply that while the U.S. economy is not nearing recession, there are signs of a deceleration that could ease inflationary pressures. Recently, the markets have experienced volatile shifts as economic data has prompted traders to revise their forecasts concerning the Federal Reserve’s interest rate strategies for 2025.
When reports mitigate inflation fears, expectations for potential interest rate reductions tend to rise, consequently lowering Treasury yields and boosting stock prices. Conversely, with inflation concerns heightened, whether due to a robust economy or policy proposals from the upcoming administration, Treasury yields usually increase while stock prices decline.
On Thursday, Treasury yields eased slightly. The 10-year Treasury yield fell to 4.61% from 4.66% recorded late Wednesday and from 4.79% on Tuesday.
The two-year Treasury yield, which is more sensitive to predictions regarding the Federal Reserve’s future actions, decreased to 4.23% from 4.27% at the end of Wednesday and 4.37% earlier in the week.
However, Treasury yields remain higher compared to last autumn, which can exert downward pressure on stock valuations unless companies display robust profit growth to compensate.
On Wall Street, Morgan Stanley’s shares surged by 4% after reporting quarterly earnings that exceeded analysts’ expectations. CEO Ted Pick commented on the improvement in investment banking and noted that strong financial markets contributed to a rise in total client assets to $7.9 trillion across its wealth and investment management sectors.
This positive momentum followed a number of banks, including Citigroup, Goldman Sachs, and Wells Fargo, who reported earnings that surpassed forecasts the day prior.
Bank of America also reported earnings on Thursday that exceeded expectations, but its stock experienced a decrease, falling by 1%.
In contrast, U.S. Bancorp suffered one of the largest losses in the S&P 500, dropping by 5.6% after its quarterly results disappointed analysts.
The most significant declines were observed in UnitedHealth Group, which fell by 6%. Although the insurer posted stronger-than-anticipated profits, its revenue fell short of projections, leading to concerns over rising medical costs—an unexpected factor for analysts. This was the firm’s first earnings report since a shooting incident involving one of its executives in early October outside a New York City hotel.
Tesla also weighed down the market as shares decreased by 3.4% following reports of discounts on its Cybertruck, a move indicative of challenges in maintaining demand as electric vehicle sales face a decline for the first time in twelve years.
In summary, the S&P 500 fell by 12.57 points to 5,937.34, the Dow slid by 68.42 to 43,153.13, and the Nasdaq composite dropped by 172.94 to 19,338.29.
Across international markets, indexes showed positive momentum in many regions of Europe and Asia. France’s CAC 40 saw a 2.1% increase, while South Korea’s Kospi and Hong Kong’s Hang Seng both gained 1.2%.
A notable highlight was Taiwan Semiconductor’s quarterly report, which boasted a 57% increase in profits, largely attributed to the booming artificial intelligence sector. Following this announcement, its U.S.-traded stock rose by 3.9%.
