Wall Street drifts near records as it heads for the finish of a winning week
NEW YORK (AP) — Wall Street is drifting on Friday toward the finish of its third winning week in the last four, as more big U.S. companies deliver stronger profits for the spring than analysts expected.
The S&P 500 was virtually unchanged in midday trading after setting its all-time high the day before. The Dow Jones Industrial Average was down 155 points, or 0.3%, as of 11:30 a.m. Eastern time, and the Nasdaq composite was nearly unchanged after coming off its own record.
Norfolk Southern chugged 2.5% higher after an AP source said it’s talking with Union Pacific about a merger to create the largest railroad in North America, one that would connect the East and West coasts. Any such deal, though, would likely face tough scrutiny from U.S. regulators. Union Pacific’s stock fell 1.7%.
Two of the heavier weights on the market, meanwhile, were companies that actually reported stronger profits for the latest quarter than analysts expected.
Netflix dropped 4.6%. Analysts said it’s not a surprise the stock was sluggish despite reporting a stronger-than-expected profit. It had already already soared 43% for the year so far, coming into the day, six times more than the gain for the S&P 500.
American Express likewise delivered a better-than-expected profit report, but its stock lost 2.8%. Analysts pointed to slowing growth in some underlying trends, such as the number of cards it issued.
Exxon Mobil sank 2% and also helped to tug on the market. It had been challenging Chevron’s $53 billion deal to buy Hess, but an arbitration ruling in Paris about some of Hess’ assets off Guyana’s coast allowed the buyout to go through. Chevron slipped 0.2%.
Stronger-than-expected profit reports for the spring did help several stocks rally. Charles Schwab climbed 2.1%, Regions Financial jumped 5.2% and Comerica added 3.9%.
In the bond market, Treasury yields eased after a report suggested U.S. consumers may be feeling less fearful about coming inflation. They’re bracing for inflation of 4.4% in the year ahead, down from last month’s projection of 5%, according to preliminary results from a University of Michigan survey.
That’s important because expectations for high inflation can feed into behaviors that create a vicious cycle that keep inflation high. Overall sentiment among consumers, meanwhile, was a hair better than economists expected but still well below its historical average.
“Consumers are unlikely to regain their confidence in the economy unless they feel assured that inflation is unlikely to worsen, for example if trade policy stabilizes for the foreseeable future,” according to Joanne Hsu, the survey’s director.
The yield on the 10-year Treasury sank to 4.42% from 4.47% late Thursday. The two-year Treasury yield, which more closely tracks expectations for what the Federal Reserve will do with its short-term rates, also dropped. It fell to 3.86% from 3.91%.
A top Fed official, Gov. Chris Waller, said late Thursday that the Fed should cut its overnight interest rate as soon as its next meeting in a couple weeks. That follows sharp criticism from President Donald Trump, who has been castigating the Fed for holding interest rates steady this year instead of cutting them, as it did late last year.
Lower rates could give the economy a boost, and Trump has also implied they could help the U.S. government save money on its debt payments, though that’s uncertain. The interest rates Washington has to pay on its longer-term debt can depend more on what bond investors think than on what the Fed does, and they can even move in opposite directions.
The chair of the Fed, meanwhile, has been insisting that he wants to see more data about how Trump’s tariffs will affect the economy and inflation before the Fed makes its next move. The downside of lower interest rates is that they can give inflation more fuel, and prices may already be starting to feel the upward effects of tariffs.
Traders on Wall Street still think it’s much more likely that the Fed will resume cutting interest rates in September, rather than later this month, according to data from CME Group.
In stock markets abroad, indexes were mixed across Europe and Asia. Hong Kong’s Hang Seng jumped 1.4%, but Tokyo’s Nikkei 225 slipped 0.2% ahead of an election for the upper house of parliament on Sunday that could wipe out the ruling coalition’s upper house majority.
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AP Writers Teresa Cerojano and Matt Ott contributed.