Stock market slows as Wall Street loses momentum and U.S. stocks drift

Stock markets in the United States were stable on Thursday, driven by a mix of earnings reports from major companies like Morgan Stanley and UnitedHealth Group. The S&P 500 experienced slight gains, bouncing between positive and negative territory during midday trading. The Dow Jones Industrial Average was down slightly, and the Nasdaq composite also saw a slight decline.

Investors were cautiously optimistic after a positive inflation report that raised hopes of further interest rate cuts by the Federal Reserve. This optimism was tempered by mixed economic reports released on Thursday. Retail sales growth in the U.S. was weaker than expected, while more workers filed for unemployment benefits. Surprisingly, manufacturing in the mid-Atlantic region showed signs of growth.

These reports indicate that the U.S. economy is not heading toward a recession but may be slowing down. This slowdown could alleviate pressure on inflation. As economic indicators fluctuate, traders are adjusting their expectations for interest rate cuts in 2025. Positive economic reports have led to increased expectations of rate cuts, resulting in lower Treasury yields and higher stock prices. Conversely, concerns about inflation have caused Treasury yields to rise while stock prices fell.

On Thursday, Treasury yields remained relatively stable, with the 10-year yield dropping to 4.62% from 4.66%. The 2-year yield, which reflects expectations for the Fed’s future actions, also declined. While yields are higher compared to last autumn, they can adversely impact stock prices unless companies can boost profits to compensate.

During midday trading, Morgan Stanley’s stock climbed after reporting stronger than expected earnings for the quarter. CEO Ted Pick credited improvements in investment banking and growth in total client assets. Other banks like Citigroup, Goldman Sachs, and Wells Fargo also posted positive profit reports. Conversely, U.S. Bancorp and UnitedHealth Group underperformed, with the latter experiencing a revenue shortfall due to unexpected medical costs.

Stock markets in Europe and Asia saw gains, with companies like Taiwan Semiconductor posting solid results. The semiconductor manufacturer reported a 57% increase in profits driven by the artificial intelligence sector. In the U.S., stocks of chip-related companies like KLA and Lam Research rose in response.

Overall, the U.S. stock market remained stable as investors navigated a mixed bag of earnings reports and economic data. Economic reports continue to dictate market movements as traders assess the possibility of future interest rate cuts by the Federal Reserve.