- The US economy is still doing better than other economies even with higher interest rates.
- The S&P 500 saw a 0.7% decline in midday trading.
- The Federal Reserve will most likely keep rates unchanged at its upcoming meeting, which concludes on Wednesday.
Fears that the uncertain state of the global economy will affect the profits of large corporations have led to mixed trading on Wall Street on Thursday. Reportedly, the US economy is still doing better than other economies even with higher interest rates.
With the Nasdaq composite losing 1.2%, the largest percentage of the market, the S&P 500 saw a 0.7% decline in midday trading. There was a 0.4% decrease in the Dow Jones Industrial Average. Big Tech’s decline in the market was similarly slow.
Mixed Trading
Treasury yields have increased in response to economic reports, drawing attention from worldwide financial markets to the U.S. bond market. The yield on the 10-year Treasury dropped from 4.96% to 4.90% as the European Central Bank decided not to raise interest rates for the first time in more than a year.
Sharply slowing the economy and increasing the likelihood of a recession in the future, higher bond yields make investors less willing to pay premium prices for stocks and other investments.
Notwithstanding Wall Street’s greater concern for the future than for the past, Thursday’s robust economic reports demonstrate that the U.S. economy is not in a recession.
A strong economy may drive inflation higher over time, which would force the Fed to maintain high interest rates for an extended period to combat high inflation. This would indicate that business profits and the economy would eventually weaken.
The Federal Reserve will most likely keep rates unchanged at its upcoming meeting, which concludes on Wednesday, according to traders. Even higher-than-expected earnings from some of the most powerful firms on Wall Street, though, haven’t been able to stop the market’s decline.
Despite Facebook’s and Instagram’s parent company reporting higher profits and revenue for the most recent quarter than analysts had predicted, Meta Platforms fell 3.6%.
Most companies have exceeded analysts’ summer profit projections, but several well-known businesses saw their stock prices drop on Thursday as a result of unsatisfactory earnings reports or projections for future trends.
Because of apprehension about the strength of the global economy, UPS lowered its expectations for certain full-year results, which caused the company to fall 4.4%.
A dysfunctional Capitol Hill in Washington may see some stability with the election of a new speaker for the House of Representatives. Approximately half a percentage point of growth in the economy would be lost in the last three months of 2023 and the first quarter of 2024 if there is a government shutdown that lasts up to two or three weeks in November, according to Goldman Sachs economists.
