Stocks rise as the yo-yo on Wall Street swings back upward
Stocks are rising on Wall Street Thursday following another mixed batch of earnings reports that included several standouts like The Walt Disney Co.'s.
The S&P 500 was 0.7% higher in early trading. The Dow Jones Industrial Average was up 224 points, or 0.7%, at 34,173, as of 10 a.m. Eastern time, while the Nasdaq composite was 1% higher.
Stocks have been shaky this week, flipping from gains to losses and back again amid uncertainty about where interest rates and inflation are heading. A still-strong jobs market has markets buying more into the Fed's forecast that it will hike rates a couple more times before holding them at a high level through this year. High rates can drive down inflation but also raise the risk of a severe recession and hurt investment prices.
High inflation and worries about a slowing economy have already hit corporate earnings, and big U.S. companies have recently been reporting relatively lackluster results for the end of 2022.
Disney surprised the market when it reported stronger profit for the latest quarter than analysts expected. It also said it will cut about 7,000 jobs as part of a plan to reduce its costs by US$5.5 billion. Its shares climbed 3.7%.
The media giant joins the growing list of high-profile companies to announce layoffs amid an uncertain economy. The bulk began in the technology industry, where companies acknowledged misreading the boom coming out of the pandemic and hiring too many people. But job cuts have since spread out to other industries.
Overall, though, the job market has remained resilient. Last week, 196,000 U.S. workers filed for unemployment benefits. That was slightly more than the prior week, but it remained below the 200,000 level for a fourth straight week.
While a strong job market is good for workers and for sales of companies selling to them, the Federal Reserve also worries that it could lead to upward pressure on inflation. If employers have to give big raises to keep and attract workers, the worry is that could force them to raise prices for their own products and services.
Shares of casino operators were strong Thursday after earnings reports raised optimism about momentum in both Las Vegas and Macau in Asia. MGM Resorts International climbed 8.5%, while Wynn Resorts rose 7.2%.
PepsiCo also gained, rising 1.2%, after reporting stronger profit and revenue for the last three months of 2022 than analysts expected.
On the losing end was Baxter International, which dropped 12.2% after the health care company reported weaker quarterly profit than forecast. It also gave a forecast for earnings this upcoming year that fell below Wall Street's expectations. Baxter also announced layoffs to cut costs, saying it would reduce its global workforce by less than 5%.
Mattel tumbled 10.3% after the toymaker reported a big decline in sales and weaker profit than expected for the all-important holiday quarter.
In the bond market, the yield on the 10-year Treasury fell to 3.59% from 3.62% late Wednesday. It helps set rates for mortgages and other loans. The two-year yield, which moves more on expectations for Fed action, ticked up to 4.45% from 4.43%.
AP Business Writers Elaine Kurtenbach and Matt Ott contributed
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