Stock market today: Most of Wall Street slips as expectations rise that interest rates will remain high | National business

NEW YORK (`) — Most U.S. stocks fell Tuesday and Treasury yields rose on expectations that interest rates could remain high for a while.

The S&P 500 fell 10.41 points, or 0.2%, to 5,051.41. The index extended its loss from the previous day as it fell under pressure from a rise in Treasury yields. The Dow Jones Industrial Average rose 63.86, or 0.2%, to 37,798.97, and the Nasdaq Composite fell 19.77, or 0.1%, to 15,865.25.

A 5.2% rise for UnitedHealth supported the market after the insurer reported better-than-analysts expected results for the first three months of the year. Morgan Stanley was another winner, rising 2.5% after also beating expectations.

However, the majority of stocks fell as Treasury yields rose following comments from Federal Reserve Chairman Jerome Powell. They have risen sharply as traders have given up hope that the Fed will make numerous interest rate cuts this year. High interest rates weigh on prices for all types of investments and increase the risk of a future recession.

Powell said at an event on Tuesday that the central bank had waited to cut its key interest rate, which is at its highest level since 2001, because it first needed more confidence for inflation to fall sustainably to its 2 percent target.

“Recent data clearly has not given us greater confidence and instead suggests that it will likely take longer than expected to achieve that confidence,” he said, pointing to a series of reports this year that showed that Inflation remained higher than forecast.

He suggested the Fed will keep interest rates stable “for as long as necessary” if higher inflation persists. But he also acknowledged that the Fed could cut interest rates if the labor market unexpectedly weakens.

Treasury yields rose immediately after Powell's comments. They were already higher after the Fed's vice chairman made similar comments earlier in the day.

Philip Jefferson said he expects inflation to continue to ease and for the Fed to keep its key interest rate “continuously at current levels.” This was in contrast to his comments in February, when he said “it will probably be appropriate to start rolling back political restraint sometime this year” if things go as expected.

The two-year Treasury yield, reflecting expectations of Fed action, shot up to 5% immediately after Powell's speech, back to November levels.

But as the afternoon progressed, yields gave up their gains, with the two-year yield falling back to 4.98%. That's still up from 4.91% late Monday.

Traders are largely betting on the Fed making just one or two rate cuts this year, after expecting six or more rate cuts by 2024. They are also now betting on a 12.5% ​​chance of no cuts, up from just 1.2% a month ago, according to CME Group data.

The risk that interest rates will remain high for longer hit real estate investment funds and utility stocks particularly hard. They pay relatively high dividends and tend to attract the same investors as bonds. If bonds pay higher yields, income-seeking investors might choose to locate there instead.

Real estate stocks fell 1.5%, posting the biggest loss among the 11 sectors that make up the S&P 500. Utilities weren't far behind, with a loss of 1.4%.

High interest rates can also translate into more expensive mortgages, and shares of homebuilders slumped after a report showed they broke ground on fewer properties last month than economists had expected. Lennar fell 2.3% and DR Horton fell 2%.

Northern Trust slumped 5% after the financial services company reported weaker earnings at the start of the year than analysts had expected. Johnson & Johnson fell 2.1% despite beating profit forecasts. Sales fell well short of expectations.

Companies are under even more pressure than usual to report higher profits and sales as the other lever driving stock prices, interest rates, is unlikely to provide much of a boost in the near term.

The shares of Donald Trump's social media company also collapsed again. Trump Media & Technology Group fell another 14.2%, extending Monday's 18.3% decline.

The company said it is launching a service to stream live TV on its Truth Social app, including news networks and “other content that has been canceled, is at risk of being canceled or is being suppressed on other platforms and services.”

The stock has fallen below $23 after approaching $80 last month as the euphoria surrounding the stock fades and the company takes steps to pave the way for some investors to sell shares.

In overseas markets, stock indexes across Asia and Europe plunged as they kept up with Monday's collapse on Wall Street. Stock indexes fell 2.1% in Hong Kong, 2.3% in Seoul and 1.8% in London.

` business reporters Matt Ott and Elaine Kurtenbach contributed.

Copyright 2024 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.