Wall Street slips as weak earnings hit tech, travel stocks
Stocks are closing lower on Wall Street as disappointing earnings reports weighed on technology and travel companies. The S&P; 500 fell 0.4%, while the Dow Jones Industrial Average and the Nasdaq also slipped Tuesday afternoon. Chipmaker Micron Technology fell after warning investors that revenue could fall short of forecasts because of weakening demand. Norwegian Cruise Line plunged after reporting disappointing financial results and giving investors a weak revenue forecast. Two reports on prices due later this week could signal to investors whether the Federal Reserve’s aggressive rate hikes this year have brought inflation under control.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
Stocks fell in afternoon trading on Wall Street Tuesday as disappointing earnings reports weighed on technology and travel companies.
The S&P; 500 fell 0.5% as of 2:16 p.m. Eastern, on pace for its fourth consective drop. The Dow Jones Industrial Average fell 77 points, or 0.2%, to 32,755 and the Nasdaq fell 1.3%.
Technology stocks fell broadly and weighed down the broader market. Chipmaker Micron Technology fell 4.8% after warning investors that revenue could fall short of forecasts because of weakening demand. That warning hit other chipmakers hard, with Nvidia shedding 4.6%.
Norwegian Cruise Line plunged 11.3% for the biggest drop in the S&P; 500 after reporting disappointing financial results and giving investors a weak revenue forecast. The weak results weighed down travel-related stocks. Expedia fell 2.8% and American Airlines fell 3.6%.
U.S. crude oil prices were little changed and energy stocks gained ground. Exxon Mobil rose 2.3%.
Audience rating company Nielsen surged 21.2% after it announced progress on a deal to be acquired by private equity firms.
Bond yields rose. The yield on the 10-year Treasury rose to 2.79% from 2.75% late Monday.
After a surprisingly strong 9.1% gain in July, the benchmark S&P; 500 index has been mostly selling off this month as Wall Street tries to gauge how aggressively the Federal Reserve will continue to raise interest rates in order to combat inflation and what that will mean for the economy and corporate profits.
Investors have been closely watching the latest round of corporate earnings and economic data for clues on how inflation is hurting consumers and businesses. As the earnings season winds down, Disney, Wendy’s and Wynn Resorts will be reporting quarterly results this week.
The U.S. Labor Department will release its July report for consumer prices Wednesday, followed by its producer prices report on Thursday. Investors and economists will look for any signs that the Federal Reserve’s aggressive rate hikes the past few months have helped to bring inflation under control.
“Regardless of that number, there’s still going to be an environment where they’re raising rates,” said Michael Landsberg, chief investment officer of Landsberg Bennett Private Wealth Management.
The Fed has raised rates four times this year in an effort to hit the brakes on the economy and cool the hottest inflation in four decades. Wall Street is worried that the central bank could slam the brakes too hard and tip the economy into a recession. Last week’s strong July jobs report has most economists predicting the Fed will again raise short-term interest rates by as much as another three-quarters of a point at its September meeting.
Most economic data already points to a slowdown. The U.S. economy has now contracted for two straight quarters, which constitutes an informal indicator of a recession. But recession fears have been tempered by a hot jobs market with unemployment at historic lows. While that’s good for the economy, it’s a sign that inflation persists.