Stock market today: Wall Street remains more stable and drifting after last week’s big swings

STAN CHOE, Associated Press

8 minutes ago

FILE – A pedestrian walks past the New York Stock Exchange in New York City on Thursday, Oct. 27, 2022. (` Photo/J. David Ake, File)

NEW YORK (`) — U.S. stocks are reeling in early trading Monday as wild recent moves on Wall Street calm somewhat.

The S&P 500 rose 0.1% in its first trading session, going from months of steep losses to its best week of the year. The Dow Jones Industrial Average rose 29 points, or 0.1%, as of 9:45 a.m. Eastern time, and the Nasdaq Composite was 0.4% higher.

The focal point for the stock market’s moves in both directions was the performance of the bond market, which fell on Monday following its own extreme moves.

The yield on the 10-year Treasury note rose to 4.61%. That’s up from 4.57% late Friday, but still below the more than 5% it hit last month, its highest level since 2007. High yields are weighing on prices for stocks and other assets while slowing the economy and increase the pressure on the financial system.

There are likely to be fewer major events on the calendar next week that could rattle markets. It’s a weaker week for corporate earnings reports, as around 50 companies in the S&P 500 report how much they earned over the summer. That’s down from about 150 a week earlier.

Constellation Energy rose 2.6% after its latest quarter results were also better than analysts expected.

Berkshire Hathaway fell 2% after reporting its latest quarter results over the weekend. The company posted a loss, but this was mainly due to the decline in the value of some of its investments on paper. Looking only at operating profit, Warren Buffett’s company beat analysts’ expectations.

Even more companies than usual in the S&P 500 have exceeded Wall Street’s earnings forecasts this reporting season. According to FactSet, the index appears to be on track to post its first earnings per share growth in a year.

“Don’t worry,” Bank of America strategists led by Savita Subramanian wrote in a BofA Global Research report. “The result was fine.”

Perhaps the events with the most potential to shake markets in the coming week are speeches for Federal Reserve officials.

Last week, the Federal Reserve kept its key interest rate stable for the second day in a row, leaving it at its highest level since 2001. It raised its key interest rate from near zero early last year in the hope of bringing high inflation under control.

Perhaps more importantly for markets, Fed Chairman Jerome Powell also suggested that a rapid rise in Treasury yields and the associated turmoil in financial markets could serve as a substitute for further rate hikes if they remain “sustained.” That raised hopes that the Fed might be finished raising interest rates and also led traders to bet that the central bank could start cutting rates in the summer.

Interest rate cuts can act like steroids for financial markets. However, if the 10-year yield falls too much, it could cause the Federal Reserve to worry about upward pressure on inflation and encourage it to raise interest rates further.

A preliminary report showing what inflation U.S. households are bracing for will be released later this week. Such inflation expectations have been crucial for the Fed because it fears that too high expectations could trigger a vicious cycle that keeps inflation high.

In the oil market, crude oil prices rose after Saudi Arabia and Russia reiterated their commitment to maintain oil supply cuts of more than 1 million barrels per day until the end of the year.

The Israeli military also announced late Sunday that it had encircled Gaza City, dividing the besieged coastal strip in two, nearly a month after the intensifying conflict began.

A barrel of U.S. crude rose 1.7% to $81.84. Brent crude, the international standard, rose 1.4% to $86.10 a barrel.

In overseas stock markets, indices were mixed in Europe after surging across much of Asia.

South Korean stocks rose 5.7% after the government reinstated a ban aimed at preventing investors from betting on falling stock prices by borrowing and selling shares.

Japan’s Nikkei 225 index rose 2.4% and Hong Kong’s Hang Seng rose 1.7%.

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` writer Zimo Zhong contributed.