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Financial Markets 01/13 16:02
NEW YORK (AP) -- Wall Street pulled back from its records on Tuesday
following a mixed start to the latest profit reporting season for big U.S.
companies.
The S&P 500 fell 0.2% from its all-time high set the day before. The Dow
Jones Industrial Average dropped 398 points, or 0.8%, from its own record,
while the Nasdaq composite slipped 0.1%.
U.S. companies are under pressure to deliver strong growth in profits to
justify the runs to records their stock prices have made. Analysts expect
companies in the S&P 500 index will deliver earnings per share for the final
three months of 2025 that are 8.3% higher than a year earlier, according to
FactSet.
JPMorgan Chase helped kick off the latest reporting season by delivering
weaker profit and revenue than analysts expected. Its stock fell 4.2% and was
one of the heaviest weights on the market.
The shortfall may have been because some analysts hadn't updated their
estimates to account for an earnings hit resulting from the bank's purchase of
the Apple Card credit card portfolio. CEO Jamie Dimon sounded relatively
optimistic about the U.S. economy, saying "consumers continue to spend, and
businesses generally remain healthy."
Delta Air Lines lost 2.4% despite reporting a stronger profit than analysts
expected. Its revenue came up short of Wall Street's expectations, as did the
midpoint of its forecasted range for profit in 2026.
Chipotle Mexican Grill sank 2.3% after saying it's looking for a new chief
marketing officer, a move that surprised analysts.
On the winning side of Wall Street were several health care companies that
raised their financial forecasts at an industry conference with analysts.
Moderna jumped 17.1% for the biggest gain in the S&P 500 after saying it
expects to report revenue for 2025 that's above the midpoint of the range it
had forecast in November. It also offered updates on several products,
including a seasonal flu vaccine that could see potential approvals beginning
later this year.
Revvity rose 6% after the life sciences company said it expects to report
profit for 2025 that's above the top end of the forecasted range it had earlier
given. Its forecast for revenue in the fourth quarter also topped analysts'
expectations.
Cardinal Health added 2.8% after saying it expects to earn at least $10 in
adjusted earnings per share in its fiscal 2026 year, up from its prior
forecasted range of $9.65 to $9.85.
All told, the S&P 500 fell 13.53 points to 6,963.74. The Dow Jones
Industrial Average dropped 398.21 to 49,191.99, and the Nasdaq composite sank
24.03 to 23,709.87.
In the bond market, Treasury yields eased after a highly anticipated update
on inflation came in close to economists' expectations. The data strengthened
expectations that the Federal Reserve will cut its main interest rate at least
twice in 2026 to shore up the job market.
Lower interest rates could make borrowing cheaper for U.S. households and
boost prices for investments, but they could also worsen inflation at the same
time. Tuesday's report showed that U.S. consumers paid prices last month for
gasoline, food and other costs of living that were 2.7% higher overall than a
year earlier. That's a touch worse than economists expected and above the Fed's
2% target for inflation.
But, in a more encouraging sign, an important underlying trend of inflation
wasn't as bad last month as economists expected. That could give the Fed more
leeway to lower interest rates later.
"We've seen this movie before--inflation isn't reheating, but it remains
above target," according to Ellen Zentner, chief economic strategist for Morgan
Stanley Wealth Management.
The data helped the 10-year Treasury ease to 4.17% from 4.19% late Monday.
The two-year Treasury yield, which more closely tracks expectations for what
the Fed will do, inched down to 3.52% from 3.54%.
A day earlier, Treasury yields swung amid worries about the Federal
Reserve's worsening feud with President Donald Trump. The concern is that the
president's attacks on the Fed could result in a central bank that's more
subservient to the White House. Experts say that in turn could lead to higher
inflation over the long term.
In stock markets abroad, indexes were mixed in Europe and Asia.
Japan's Nikkei 225 soared 3.1% for one of the world's biggest moves and set
a record, thanks in part to strength for technology-related stocks.
Investors expect Japanese Prime Minister Sanae Takaichi, who took office in
October, to try to capitalize on her relatively high popularity and call a snap
election, hoping to strengthen her mandate for higher government spending.
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AP Business Writers Chan Ho-him and Matt Ott contributed.
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