NEW YORK (AP) — U.S. stock indexes are being held back by continued drops in Big Tech stocks on Tuesday.
The S&P 500 was down 0.8% in afternoon trading, despite most stocks within it rising. The Dow Jones Industrial Average was up 79 points, or 0.2%, as of 1:25 p.m. Eastern time, while the Nasdaq composite was down 1.6%.
PayPal saw an increase of 8.6%, driving market performance after surpassing analysts’ profit expectations for the spring. Additionally, it raised its profit forecast for the full year.
JetBlue Airways rose 17.4% after reporting a profit for the spring, defying analyst expectations for a loss. The airline also outlined strategies to enhance on-time performance and attract customers.
However, a 2.1% decline in Microsoft shares weighed down the S&P 500 as investors await its latest profit report after markets close. Other stocks in the “Magnificent Seven” group, which includes Nvidia, also experienced declines, with the latter falling 7.8%.
The surge in these Big Tech stocks had propelled the S&P 500 to numerous record highs this year fueled by investor excitement over artificial intelligence technology. However, their momentum waned this month due to concerns of overvaluation and high expectations.
Last week, lackluster profit reports from Tesla and Alphabet raised worries that other “Magnificent Seven” stocks might underwhelm as well. Amazon, Apple, and Meta Platforms are set to report their latest profit results in the coming days, carrying significant weight on the S&P 500 as they are among the largest in value.
Fortunately, other stocks have been on the rise to offset some of the recent weakness in Big Tech, including smaller stocks and companies closely tied to the strength of the economy. This optimism stems from hopes of slowing inflation prompting the Federal Reserve to consider interest rate cuts soon.
The Russell 2000 index of smaller stocks remained relatively flat on Tuesday.
While no interest rate cuts are anticipated at this week’s Federal Reserve meeting, expectations are high for a rate cut at its next session in September.
The Fed had hiked interest rates 11 times starting in March 2022 to address the inflation that arose during the economic rebound from the pandemic-induced recession. The Fed has not changed its benchmark rate, currently at a more than two-decade. angle, for about a year.
Expectations of a forthcoming accommodative Fed policy have led to declining yields in the bond market, which were steady on Tuesday. The 10-year Treasury yield was at 4.17%, remaining unchanged from late Monday and down from 4.70% in April.
Yields saw a slight uptick in the morning following stronger-than-expected economic reports. One report indicated a slight increase in job openings as of the end of June, signaling positive news for workers but also raising concerns about inflation. Another report revealed a stronger-than-expected improvement in U.S. consumer confidence, striking a balance between growth and inflation concerns.
Merck fell 8.9% despite posting better-than-expected results for the last quarter. The company’s profit forecast for the year fell short of analyst projections due in part to expenses related to its Eyebiotech acquisition.
Procter & Gamble slid 5.4% after surpassing profit forecasts in the latest quarter but falling short on revenue. Shifting foreign exchange rates negatively impacted its international sales, and the company expects this challenge to persist in the upcoming fiscal year.
In global stock markets, indexes were mixed in Asia and Europe ahead of pivotal central bank decisions.
Japan’s Nikkei 225 gained 0.1% ahead of the Bank of Japan meeting, where an interest rate increase may be expected.
The FTSE 100 in London declined 0.2% ahead of a Bank of England decision that could involve a rate cut.
Indexes in continental Europe were stronger following reports of stronger-than-expected economic growth in the second quarter among Eurozone countries using the euro currency, according to data released by Eurostat.
AP Business Writers Yuri Kageyama and Matt Ott contributed.
Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
