Stocks Edge Higher After Economic Report

By STAN CHOE AP Business Writer

NEW YORK (AP) — Stocks are ticking higher on Wall Street Thursday following reports suggesting the economy and corporate profits may be doing better than feared.

The S&P 500 was 0.6% higher in morning trading. The Dow Jones Industrial Average was up 25 points, or 0.1%, at 33,767, as of 10:17 a.m. Eastern time, and the Nasdaq composite was 1.1% higher.

Big swings may still be ahead, though, as each of the reports guiding the market had both positives and negatives for investors. Markets have veered up and down recently as worries about a severe recession and drop-off in profits battle against hopes the economy can manage a soft landing and the Federal Reserve may ease up on interest rates. A day earlier, stocks tumbled to sharp losses out of the gate, only to roar all the way back to finish nearly flat.

Thursday’s headline report showed the overall economy held up better through the last three months of 2022 than economists expected, even with the weight of all the rate hikes the Fed approved last year to combat inflation. The economy’s growth slowed to an annual rate of 2.9% in the quarter, but that was still stronger than the 2.3% that economists had forecast.

Other reports showed that orders for long-lasting goods from factories strengthened by more than expected in December and fewer workers applied for jobless claims than expected last week.

Such strength gives hope the economy can withstand last year’s blizzard of rate hikes by the Fed, plus at least one more expected next week, without crashing to a deep recession. Higher rates intentionally slow the economy by making it more expensive to borrow to buy a home, a car or anything else on credit. They also drag down prices for stocks and other investments.

But a stronger-than-expected economy, particularly in the jobs market, can also carry counterintuitive risks. It could push the Fed to keep rates higher for longer in order to ensure inflation really is crushed. That would dash hopes on Wall Street that the Fed may cut rates later this year, something that typically acts like steroids for markets.

The yield on the 10-year Treasury, which helps set rates for mortgages and other loans crucial for the economy, rose to 3.47% from 3.45% late Wednesday. The two-year yield, which tends to more closely track expectations for Fed actions on interest rates, rose to 4.16% from 4.13%.

On the earnings front, reports from some big tech-oriented companies helped build optimism a day after worries flared following forecasts from Microsoft widely seen as discouraging.

Tesla jumped 8% after the electric-vehicle maker reported stronger profit for its latest quarter than analysts expected. Seagate Technology rose 6.4% after it reported stronger revenue and earnings than expected.

Steelmaker Nucor was also among the top-performing stocks in the S&P 500, rising 6.5% after beating Wall Street’s profit and revenue forecasts.

Chevron rose 2.5% after it raised its dividend and approved a program to buy back up to $75 billion of its stock. Both moves put cash directly in the pockets of shareholders, which caught the criticism from Washington. White House spokesman Abdullah Hasan suggested oil companies instead “use their record profits to increase supply.”

On the losing end of Wall Street was Sherwin Williams. It fell 9.7% after reporting weaker revenue for its latest quarter than expected.


AP Business Writers Joe McDonald and Matt Ott contributed.

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