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Financial Markets 12/16 09:30
NEW YORK (AP) -- The U.S. stock market is holding nearly in place on Tuesday
following mixed data on the economy's strength, which did little to clear
uncertainty about where interest rates may be heading.
The S&P 500 was virtually unchanged in morning trading and remains a bit
below its all-time high set last week. The Dow Jones Industrial Average was
down 43 points, or 0.1%, as of 10 a.m. Eastern time, and the Nasdaq composite
was 0.3% higher.
Treasury yields eased a bit, following an initial swing, after one report
said the U.S. unemployment rate was at its worst level last month since 2021,
but employers also added more jobs than economists expected. A separate report,
meanwhile, said an underlying measure of strength for revenue at U.S. retailers
grew more in October than economists expected.
The mixed data initially sent Treasury yields lower in the bond market. The
knee-jerk reaction seemed to be that the data could encourage the Federal
Reserve to see the slowing job market as the biggest threat to the economy,
rather than high inflation, and cut interest rates further in 2026. But yields
quickly recovered and then drifted up and down.
What the Fed does with interest rates is a top driver for Wall Street
because lower rates can give a boost to the economy and to prices for
investments, even if they also may worsen inflation. A report coming on
Thursday will show how bad inflation was last month, and economists expect it
to show prices for U.S. consumers continue to rise faster than anyone would
like.
A report released after trading began on Tuesday suggested price pressures
are rising sharply, with average selling prices for businesses climbing at one
of its fastest rates since the middle of 2022. The preliminary report from S&P
Global also said growth for overall business activity slowed to its weakest
level since June.
"Higher prices are again being widely blamed on tariffs, with an initial
impact on manufacturing now increasingly spilling over to services to broaden
the affordability problem," according to Chris Williamson, chief business
economist at S&P Global Market Intelligence.
In the bond market, the yield on the 10-year Treasury eased to 4.16% from
4.18% late Monday. The two-year yield, which more closely tracks expectations
for the Fed, fell to 3.48% from 3.51%.
Helping to keep the overall market in check were continued swings for stocks
that have been caught up in the frenzy around artificial-intelligence
technology.
Oracle rose 1%, and Broadcom added 0.7%. They both had dropped to sharp
losses last week, even though both reported stronger profits for the latest
quarter than analysts expected.
But CoreWeave, which rents out access to top-of-the-line AI chips, fell 2.4%.
Questions remain about whether all the spending that companies are broadly
doing on AI technology will produce the kind of profits and productivity that
will make it worth the expense.
Elsewhere on Wall Street, Pfizer fell 3.3% after giving a forecast for
profit in 2026 that was below what some analysts expected. Its forecast for
revenue next year, of between $59.5 billion and $62.5 billion, was close to
analysts' expectations.
Kraft Heinz rose 0.6% after saying Steve Cahillane, who was most recently
CEO of Kellanova, will join as CEO on Jan. 1. After Kraft Heinz splits into two
companies, which is expected to happen in the second half of 2026, Cahillane
will lead the one that will hold onto the Heinz, Philadelphia and Kraft Mac &
Cheese brands.
In stock markets abroad, indexes fell across much of Europe and Asia.
Japan's Nikkei 225 dropped 1.6% after preliminary factory data showed
manufacturing contracting slightly. Investors widely expect the Bank of Japan
to announce an increase to interest rates later this week.
South Korea's Kospi dropped 2.2%, while indexes fell 1.5% in Hong Kong and
1.1% in Shanghai.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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