By DAMIAN J. TROISE
Stocks gave back gains in afternoon trading on Wall Street Thursday as investors gauged the latest corporate earnings and monitored inflation’s impact on the economy.
The S&P 500, which had been up 1.5% earlier, slipped to a 0.1% gain as of 3:11 p.m. Eastern. The benchmark index was roughly split between gainers and losers.
The Dow Jones Industrial Average rose 51 points, or 0.1%, to 35,079. The tech-heavy Nasdaq was mostly unchanged after giving up a 2.1% gain. The index’s losses in recent months had by Wednesday left it in what Wall Street considers a market correction, or 10% below its peak.
Technology stocks gave up early gains. Chipmaker Nvidia fell 1.8%. The sector once again directed the broader market. As investors prepare for higher interest rates, shares in pricey tech companies and other expensive growth stocks look relatively less attractive.
Banks and health care stocks made gains, while retailers and communications and stocks slipped.
The yield on the 10-year Treasury rose to 1.84% from 1.82% late Wednesday.
Stocks are headed for weekly losses in what has so far been a losing month for every major index. The downturn follows a strong 2021 where the S&P 500 gained 26.9%. Investors may be resetting their expectations moving ahead, said Mark Hackett, chief of investment research at Nationwide.
“Investors are starting to get more realistic about the way the world is going to look going forward,” he said.
Wall Street brushed off a report from the Labor Department that showed the number of Americans applying for unemployment benefits rose to the highest level in three months as the fast-spreading omicron variant continued to disrupt the job market.
The job market has had a rocky recovery from the virus pandemic. The unemployment rate fell last month to a pandemic low 3.9%.
Employment data was also closely watched by investors trying to gauge how it would effect the Federal Reserve’s decision to ease up on support for the markets and economy. The central bank made it clear early in the pandemic that it was basing much of its support on how quickly employment recovers.
The Fed is now expected to raise interest rates earlier and more often in order to fight rising inflation that threatens to derail a further economic recovery. Supply chain problems and higher raw materials costs have prompted businesses to raise prices on finished goods and economists are concerned that consumers will eventually grow tired of paying higher prices and cut their spending.
Companies are reminding investors that supply chain problems are still weighing on operations. Recent inflation reports have been worrisome, while economic data on retail sales has also disappointed.
“These are all the things that are justifying some of the sloppiness we’re starting the year with,” Hackett said.
The latest round of corporate earnings is also giving investors a clearer picture of where Americans are spending money and how inflation is impacting the economy.
American Airlines fell 1.1% and United Airlines slipped 1% after warning investors that the latest surge in COVID-19 cases will hurt their finances early in 2022. Both airlines reported losses for the fourth quarter, though they were smaller than analysts’ expected.
Aluminum products maker Alcoa jumped 4.3% after reporting strong fourth-quarter financial results as prices for commodities rose. Insurer Travelers rose 3.8% after handily beating analysts’ financial forecasts.
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