Wall Street Retreats from Record Highs Amid Quiet Trading and Mixed Earnings Reports
NEW YORK (AP) — U.S. stock markets pulled back slightly on Friday, closing lower after hitting a record high just a day earlier, but still managed to finish the week on a positive note for the second week in a row.
The S&P 500 dipped by 0.3%, while the Dow Jones Industrial Average dropped 140 points, or 0.3%, and the Nasdaq Composite fell 0.5%. The trading session was relatively subdued, aided by stability in the bond market, which has been a key driver of Wall Street’s movements in recent months.
Bond yields, which have surged during times of rising inflation concerns and growing U.S. debt, eased in response to recent favorable inflation updates. When yields rise, they often weigh on stock prices, and when they fall, stocks tend to benefit.
The start of the earnings season for major U.S. companies has provided some support for stocks. While higher Treasury yields have exerted downward pressure on stock prices, many companies have been able to offset these headwinds with strong profits.
Brian Jacobsen, chief economist at Annex Wealth Management, suggested that 2024 could be a pivotal year for elections, while 2025 might focus on earnings growth. “Earnings have been improving fundamentally, but the question is how sustainable it will be and how much further they can rise,” Jacobsen said.
Despite reporting better-than-expected profits, Texas Instruments saw its stock drop 7.5%. Analysts focused on disappointing signals regarding the company's profitability for the first quarter of 2025, which led to a selloff in semiconductor stocks.
CSX, the railroad company, also faced a setback, with shares falling 2.9%. Despite meeting profit expectations for the latest quarter, its revenue missed forecasts due to the impact of hurricanes on its operations.
On a more positive note, shares of Novo Nordisk surged 8.5% after the Danish pharmaceutical giant announced promising results from a clinical trial for a new treatment targeting overweight and obese patients. The news raised expectations for future profits.
NextEra Energy also performed well, with shares rising 5.2%. The company’s profit exceeded expectations, boosted by rising electricity demand. Similarly, Verizon Communications saw a 0.9% increase in its stock price after reporting slightly better-than-expected earnings and unveiling a new artificial intelligence strategy for businesses.
The S&P 500 closed the day down 17.47 points at 6,101.24. The Dow Jones Industrial Average fell 140.82 points to 44,424.25, and the Nasdaq Composite dropped 99.38 points, ending at 19,954.30.
In the bond market, the yield on the 10-year Treasury note eased to 4.61% from 4.65%, reflecting weaker-than-expected economic data. A report showed that consumer sentiment fell in January for the first time in six months, while another suggested that U.S. business activity had slowed more than anticipated. A third report offered a slight positive surprise, showing stronger-than-expected sales of previously occupied homes last month.
Traders are not anticipating that the weak economic data will lead the Federal Reserve to cut interest rates at its upcoming meeting next week. Market expectations, according to data from CME Group, suggest the Fed will hold rates steady, marking the first meeting since it began lowering rates in September to support the economy.
Abroad, global markets showed mixed results. Japan's Nikkei 225 edged down 0.1% after the Bank of Japan raised its benchmark interest rate to 0.5%, its highest level since 2008. Meanwhile, stocks in Hong Kong and Shanghai saw stronger performances, rising 1.9% and 0.7%, respectively.