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Financial Markets 02/19 09:49
NEW YORK (AP) -- U.S. stock indexes are edging lower on Wall Street
Wednesday.
The S&P 500 was down 0.1%, a day after setting an all-time high. The Dow
Jones Industrial Average was down 122 points, or 0.3%, as of 10:30 a.m. Eastern
time, and the Nasdaq composite was 0.3% lower.
Celanese helped drag the market lower and tumbled 20% even though the
chemical company reported profit for the end of 2024 that topped analysts'
expectations. CEO Scott Richardson warned that it saw "demand deterioration
that gave no sign of easing" during the last three months of the year, and the
company expects weakness to continue for such core markets as automotive,
construction and paints.
The stock of zero-emissions vehicle maker Nikola plunged 38.2% after it
filed for Chapter 11 bankruptcy protection, a move that often wipes out the
holdings of stock investors. The company said it will try to sell off its
assets and wind down its business.
The loss for Nikola could be a gain for rivals selling their own low- or
zero-emission vehicles. Elon Musk's Tesla rose 2.5% and was one of the
strongest forces pushing upward on the S&P 500.
Toll Brothers, meanwhile, fell 5.6% after the homebuilder reported a weaker
profit for the latest quarter than analysts expected. CEO Douglas Yearley Jr.
said this spring selling season has seen healthy demand so far for homes at the
higher end of the price spectrum, but "affordability constraints" are hurting
sales at the lower end.
A separate report on Wednesday morning said homebuilders as a group broke
ground on fewer U.S. houses last month than economists expected.
High mortgage rates are making it difficult for some potential homebuyers to
afford a house, even though the Federal Reserve began cutting its main interest
rate in September in order to make things easier for the economy.
Mortgage rates have followed the trend of longer-term Treasury yields, which
have remained relatively high in part because the U.S. economy has remained
remarkably solid and because inflation hasn't eased as much as hoped. Tariffs
threatened by President Donald Trump, along with other policies that could put
upward pressure on inflation, have also caused some sharp swings for yields in
the bond market.
The yield on the 10-year Treasury stayed relatively calm Wednesday and edged
down to 4.54% from 4.55% late Tuesday. It was below 3.70% as recently as
September and approaching 4.80% within the past few weeks.
Both the bond and the stock markets have increasingly been taking Trump's
tariffs in stride, after earlier showing much more trepidation. The hope on
Wall Street is that Trump is using such threats merely as a tool to drive
negotiations, and the ultimate effects won't be as bad as they initially
appeared.
Such a calm response, though, could make things worse if conditions don't go
as Wall Street expects, or if it emboldens Trump to make even more forceful
actions.
Later on Wednesday, the Fed will release the minutes from its last policy
meeting, when it left its benchmark interest rate alone in January after
cutting it at its previous three meetings. The Fed has signaled it may make
fewer cuts this year than earlier expected, in part because of worries that
inflation will remain stubbornly above its 2% target.
Cutting rates can boost the economy and juice prices for investments, but
they can also give inflation more fuel.
In stock markets abroad, London's FTSE 100 fell 0.5% after a report showed
U.K. inflation accelerated to a 10-month high. That could put pressure on the
Bank of England, which had been cutting interest rates to invigorate its tepid
economy.
Indexes fell more than 1% in other European markets, including in France and
Germany, after finishing mixed across Asia. South Korea's Kospi jumped 1.7%,
while Japan's Nikkei 225 slipped 0.3%.
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AP Business Writers Matt Ott and Zen Soo contributed.
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