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Financial Markets 05/22 15:30
NEW YORK (AP) -- U.S. stocks ended a wobbly day mostly lower in what has
been a rocky week because of worries coming out of the bond market about the
U.S. government's mounting debt. The S&P 500 slipped less than 0.1% Thursday.
The Dow Jones Industrial Average was little changed, and the Nasdaq composite
rose 0.3%. Treasury yields were also holding a bit steadier in the bond market,
but only after oscillating earlier in the morning after the House of
Representatives approved a bill that would cut taxes and could add trillions of
dollars to the U.S. debt.
THIS IS A BREAKING NEWS UPDATE. AP's earlier story follows below.
NEW YORK (AP) -- U.S. stocks are gaining ground at the end of a wobbly day
of trading Thursday in what has been a rocky week so far because of worries
coming out of the bond market about the U.S. government's mounting debt.
The S&P 500 rose 0.4%, coming off a sharp loss that has it potentially
heading for its worst week in the last five. The Dow Jones Industrial Average
was up 184 points, or 0.4%, as of 3:25 p.m. Eastern time, and the Nasdaq
composite was 0.9% higher.
Technology stocks with outsized values that tend to sway the market up or
down led the market higher. Google's parent Alphabet jumped 2.4% and Nvidia
rose 1.3%.
The choppy trading this week and sharp decline for stocks on Wednesday
follows several weeks of mostly gains that have brought the S&P 500 back within
5% of its all-time high.
"We've had a good bounce here, but the market is looking for some excuse to
take some money off the table," said Scott Wren, senior global market
strategist at Wells Fargo Investment Institute.
Treasury yields were holding a bit steadier in the bond market, which has
been the epicenter of Wall Street's action this week, but only after several
sharp swings in the morning. Yields have been on the rise in part because of
worries about the U.S. government's spiraling debt.
The House of Representatives approved a bill early Thursday that would cut
taxes and could add trillions of dollars to the U.S. debt.
Besides making it more expensive for the U.S. government to borrow to pay
its bills, higher Treasury yields can also filter into the rest of the economy
and make it tougher for U.S. households and businesses to get their own loans.
Higher yields also discourage investors from paying high prices for stocks and
other investments.
The yield on the 10-year Treasury climbed as high as 4.63% before the U.S.
stock market opened for trading, before receding to 4.54%. It stood at 4.58%
late Wednesday and was as low as 4.01% early last month. The two-year yield,
which more closely tracks expectations for action by the Federal Reserve,
slipped to 4.00% from 4.02% late Wednesday.
The House's multitrillion-dollar spending bill, which aims to extend some
$4.5 trillion in tax breaks from President Donald Trump's first term while
adding others, is expected to undergo some changes when it gets to the Senate
for a vote.
The legislation also includes a speedier rollback of production tax credits
for clean electricity projects, which sent shares of solar companies tumbling.
Sunrun dropped 36.8%, Enphase Energy fell 17.8% and First Solar slid 4.1%.
Health care stocks were also falling early Thursday after the Centers for
Medicare & Medicaid Services said it was immediately expanding its auditing of
Medicare Advantage plans. UnitedHealth Group fell 1.8% and Humana was down 6.5%.
Wall Street had several economic updates on Thursday.
The number of Americans filing unemployment claims last week fell slightly.
The broader employment market has remained strong, though businesses remain
worried about the economic uncertainty amid a trade war.
The market gained ground earlier in trading before pulling back, following a
better-than-expected report on manufacturing and services in the U.S. The
survey from S&P Global showed growth for both areas in May following a sluggish
April.
"Business confidence has improved in May from the worrying slump seen in
April, with gloom about prospects for the year ahead lifting somewhat thanks
largely to the pause on higher rate tariffs," said Chris Williamson, chief
business economist at S&P Global Market Intelligence.
The report also reflected the impact of the trade war on supply chains,
prices and concerns about the economic picture moving forward. New orders from
businesses were the big driver for the improvement, but much of that was from
businesses trying to get ahead of a potentially hefty round of tariffs that
could hit the economy in July.
"Concerns over tariff-related supply shortages and price rises led to the
largest accumulation of input inventories recorded since survey data were first
available 18 years ago," Williamson said.
A 90-day pause on some of President Donald Trump's heftiest tariffs helped
give some businesses and consumers some relief. They are already contending
with broad tariffs and their impact on prices for a wide range of goods coming
from trading partners around the world, including China, Canada and Mexico.
The overall rise in prices charged for goods and services in May was the
steepest since August 2022, according to the S&P Global report.
Businesses have been warning investors about higher costs because of
tariffs, prompting many to trim or pull financial forecasts. Many of them,
including retail giant Walmart, have also warned consumers that they are
raising prices on a wide range of goods because of higher import taxes.
In stock markets abroad, indexes fell across Europe and Asia. France's CAC
40 dropped 0.6%, Hong Kong's Hang Seng fell 1.2% and South Korea's Kospi slid
1.2% for some of the sharper losses.
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AP Business Writers Stan Choe, Matt Ott and Yuri Kageyama contributed.
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