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Wall Street Hangs Near Records 01/13 09:14
U.S. stock indexes are holding near their records on Tuesday following the
latest update on inflation, one that could keep the door open for the Federal
Reserve to cut interest rates further later this year.
NEW YORK (AP) -- U.S. stock indexes are holding near their records on
Tuesday following the latest update on inflation, one that could keep the door
open for the Federal Reserve to cut interest rates further later this year.
The S&P 500 ticked up by 0.1% in early trading, coming off its latest
all-time high. The Dow Jones Industrial Average was down 90 points, or 0.2%, as
of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.2% higher.
Yields also eased in the bond market after the inflation data strengthened
expectations that the Fed may be able to cut its main interest rate at least
twice in 2026 to shore up the job market. Traders still see little chance of a
move at the Fed's next meeting later this month, even if Tuesday's inflation
report raised the probability of a cut slightly to 5%, according to data from
CME Group.
Lower interest rates could make borrowing cheaper for U.S. households and
boost prices for investments, but it 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 higher than economists expected and above the
Fed's 2% target for inflation.
But, more encouragingly, 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 yield on the 10-year Treasury ease to 4.16% 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%.
Also helping to keep Wall Street relatively quiet were mixed profit reports
from big U.S. companies. They'll need to deliver strong growth to justify the
record-breaking runs for their stock prices, and analysts expect companies in
the S&P 500 to deliver earnings per share 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 for the end of 2025 than analysts expected, but that
may have been because some were not expecting the bank to take a one-time hit
to its earnings due to its 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." Its
stock slipped 0.6%.
Delta Air Lines, meanwhile, lost 0.5% despite reporting a stronger profit
for the end of 2025 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.
On the winning side of Wall Street was L3Harris, which rose 3.6%. The
defense company said it's planning to break off its missile business into a
separate company later this year through an initial public offering. As part of
the plan, the U.S. government agreed to invest $1 billion in the Missile
Solutions business, which will convert into common stock following the IPO.
L3 Harris will keep a controlling interest in the missile business following
the IPO.
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 gains for technology-related stocks
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