Stock market today: Wall Street's big rally fades after disappointing earnings reports | National business

NEW YORK (`) — Wall Street's gargantuan rally since Halloween slowed down on Wednesday after some disappointing earnings reports.

The S&P 500 was 0.2% lower in early trading but is still within 0.8% of its record high from nearly two years ago. The Dow Jones Industrial Average fell 88 points, or 0.2%, breaking its own record. The Nasdaq Composite was down 0.1% as of 9:35 a.m. Eastern time.

FedEx slumped 10.6% after revenue and profit for the latest quarter were weaker than analysts expected. Due to demand pressure, the company now also assumes that its revenue for the entire financial year will decline compared to the previous year's level and will not remain approximately the same.

The parcel delivery company is at the heart of the economy, boosting trade around the world. FedEx's weakness could shatter the hope that has fueled Wall Street's big rally since late October: that the Federal Reserve can give the economy a perfect landing by slowing it enough to curb high inflation, but it can't so strong that a recession occurs.

Winnebago Industries, a maker of RVs and other recreational products, also fell short of analysts' earnings expectations in the last quarter. It said it sold fewer units than a year earlier due to “market conditions” and had to offer deeper discounts. The stock fell 5.4%.

General Mills, which sells Progresso soup and Yoplait yogurt, reported higher-than-expected profit for its latest quarter, but sales fell short as the recovery in sales volume was slower than expected. The company said a key revenue metric could now decline for the full fiscal year due to “a more cautious economic outlook for consumers” and other factors. The stock fell 2.2%.

Nevertheless, encouraging signs continue to accumulate around the world that inflation is continuing to cool. In the UK, a report showed inflation unexpectedly slowed to 3.9% in November from 4.6% in October, reaching its lowest level since 2021.

Cooler inflation raises hopes that in 2024 central banks around the world can move away from their recent campaigns to sharply raise interest rates to curb high inflation. The Federal Reserve in particular is expected to see its key interest rate fall by at least 1.50 percentage points from the current 5.25% to 5.50% in 2024, the highest level in more than two decades.

On these hopes, government bond yields have fallen since the end of October and fell again following the UK inflation report.

The yield on the 10-year Treasury note fell to 3.89% from 3.93% late Tuesday. In October it was above 5%, the highest level since 2007 and exerting strong downward pressure on the stock market.

Lower interest rates and yields not only promote economic growth by making borrowing cheaper, they also increase the price of investments and reduce pressure on the entire financial system.

With yields down, US stocks are still on track for another successful week. Large internet-related companies were among the market leaders on Wednesday, including a 2.1% gain for Alphabet and a 0.4% gain for Amazon.

Shares of oil and gas companies were also strong as the price of crude oil recouped its sharp losses in recent months.

Overall, the S&P 500 just posted its seventh straight week of gains, its longest such streak in six years. That strength and length has also drawn criticism that stocks have simply risen too much.

It's still not certain whether the Fed can actually pull off what was once considered a near-impossible tightrope. And critics say the number of rate cuts Wall Street is predicting for 2024 appears unlikely unless the economy falls into recession, which would hurt corporate profits and therefore stock prices.

Some Federal Reserve officials also recently said that it is too early to consider a rate cut in March, as the majority of traders expect it to begin.

In overseas stock markets, London's FTSE 100 rose 0.9% following the encouraging inflation report. Indexes also rose across much of Asia, but stocks fell 1% in Shanghai after China left its key interest rates unchanged at its monthly benchmarking on Wednesday.

` business reporter Matt Ott contributed.

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