US Markets Taper on Earnings News and Crude Glut

US Markets Taper on Earnings News and Crude Glut

US markets pulled back today as investors have apparently hit the pause button after a record-setting streak. Several companies, including Intel and Southwest Airlines, reported earnings that disappointed investors. Shares of industrial and materials companies had some of the biggest declines, and Crude fell amid a stockpile glut, while Treasuries erased losses.

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In early afternoon trading, the Dow Jones Industrial was down 0.56% and the S&P 500 was down 0.45%. The Nasdaq composite index fell 0.35%. On Wednesday, the S&P 500 and the Dow set new highs and the Dow had a ninth consecutive day of gains.

Stocks have risen steadily since hitting a bottom nearly a month ago, helped by better-than-expected reports on corporate earnings and the economy. But while the data has often topped analysts’ forecasts, it hasn’t been very strong. Corporate earnings most likely weakened last quarter, for example, and the economy is still growing at a weaker rate than before the Great Recession. That could keep stocks hemmed in.

Even though stock prices may look expensive relative to how much profit companies are earning, US stocks could stay high because foreign stocks and bonds looked even less attractive.The global markets are confounding investors, and this may be a case where the US stock market is the only place to go, relative to other markets.

Shares of General Motors rose 1.9% after the company said its profit last quarter more than doubled from a year ago. The company also raised its earnings forecast for the year.

Charles Schwab Corp. joined a growing list of Wall Street firms predicting Treasury yields will stay low following a record-setting rally, even as US debt is on pace for its second-straight weekly decline. The yield slipped one basis point Thursday to 1.57 percent after touching 1.31 percent two weeks ago. Futures prices indicate a 44% probability of a Fed rate increase this year, up from 20% a week earlier. The Federal Open Market Committee is scheduled to next meet July 26-27.

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