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Stock market today: Wall Street stalls as hopes regress for respite on rates

NEW YORK (AP) — Stocks are stalling Thursday after a Federal Reserve official told Wall Street the end to its interest-rate hikes may not come as soon as hoped.
The S&P 500 was virtually unchanged in early trading, a day after charging higher on hopes the U.S. government is heading toward a deal to prevent a disastrous default on its debt. The Dow Jones Industrial Average was down 104 points, or 0.3%, at 33,316, as of 9:48 a.m. Eastern time, while the Nasdaq composite was 0.4% higher.
Stocks have remained remarkably resilient since early April despite a long list of worries. A major reason for that is hope the Fed would take it easier on its hikes to rates, which have slowed inflation at the expense of raising the risk of a recession and knocking down prices across financial markets. The widespread bet was that the Fed would take a pause at its next meeting in June.
“The data in coming weeks could yet show that it is appropriate to skip a meeting,” Dallas Fed President Lorie Logan said in a prepared speech for the Texas Bankers Association. “As of today, though, we aren’t there yet.”
Treasury yields climbed as traders increased bets that the Fed would raise rates again at its June meeting, though the majority are still forecasting a pause.
The yield on the 10-year Treasury rose to 3.62% from 3.57% late Wednesday. The two-year yield, which moves more on expectations for the Fed, rose to 4.22% from 4.16%.
Higher rates have already slowed swaths of the economy and helped lead to three of the largest U.S. bank failures in history since March. Reports on the economy Thursday came in mixed.
One showed that fewer workers applied for unemployment benefits last week than expected. While that’s good news for workers and for a so-far solid job market, it could also result in some upward pressure on inflation. That’s what the Fed has been trying desperately to lower by cranking its benchmark interest rate to the highest level since 2007.
A separate report said that manufacturing in the mid-Atlantic region is continuing to weaken, though not quite as badly as economists expected.
Helping to lift Wall Street was Walmart, which climbed 2.6% after reporting stronger results for the latest quarter than expected. It also raised its financial forecast for the full year, though it said it’s seeing shoppers remain cautious about spending.
Bath & Body Works, another retailer, leaped 8.6% after reporting stronger revenue and earnings for the latest quarter.
Much scrutiny has been on the retail industry because strong spending by U.S. households has been one of the main pillars keeping the economy out of a recession.
Video game maker Take-Two Interactive jumped 10.3% after it forecast a huge jump in revenue for fiscal 2025, stoking speculation that Grand Theft Auto VI is on the way.
On the losing end of Wall Street were stocks of energy producers, which dropped with the price of crude oil. Chevron fell 1.3%, and Schlumberger dropped 1.5%
Cisco Systems slipped 0.3% despite reporting stronger results for the latest quarter than expected and raising its forecast for the current quarter. Analysts said it may be because of worries about lower-than-expected growth in the following fiscal year.
In stock markets abroad, indexes rose in much of Europe and Asia after Wall Street’s rally from Wednesday spread westward. That lift came after President Joe Biden said he’s confident about reaching a deal with Republicans to allow the U.S. government to increase its credit limit and borrow more.
That could avert a potential first-ever default on Washington’s debt. The government is scheduled to run out of cash to pay its bills as soon as June 1 unless a deal is made, and economists say a default could have catastrophic consequences across financial markets and the economy.
In Asia, Japan’s Nikkei 225 rose 1.6% to continue a strong run, while Germany’s DAX in Europe returned 1.1%.
McDonald reported from Beijing; Ott reported from Silver Spring, Md.

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