Wall Street ends flat as calm continues

Netflix weighed on the market after falling 3.9%. It announced weaker revenue for the last quarter than analysts expected, although its profit beat forecasts.

Elevance Health fell 3.6% despite higher-than-expected earnings and revenue. The health insurer gave a profit forecast this year below the expectations of some analysts.

So far, most companies have exceeded earnings forecasts to break through a particularly low set bar. Analysts entered this reporting season predicting the biggest decline in S&P 500 earnings since the pandemic torpedoed the global economy in 2020. Earnings are under pressure as inflation is high, interest rates are much higher than a year ago and parts of the economy are slowing.

That’s part of the reason the market has been kind of directionless recently, said Megan Horneman, chief investment officer at Verdence Capital Advisors. We got mixed revenue, but not as bad as people expected.

Intuitive Surgical jumped 11.6% for the biggest gain in the S&P 500 after posting higher-than-expected earnings and revenue for the last quarter.

Abbot Laboratories rose 7.7%, Nasdaq Inc. gained 3% and United Airlines rose 6.7% after also beating Wall Street earnings expectations.

Particular attention has been paid to the health of banks after higher interest rates helped lead to the second and third largest US bank failures in history last month.

Industry behemoths have largely performed better than expected, with several saying they have benefited from the sector’s turmoil as customers shifted deposits to them and away from smaller banks that seemed more risky.

The fear was how much pain smaller regional banks would show in their quarterly reports, including the number of their customers who fled.

Western Alliance Bancorp., a Phoenix-based bank whose shares plunged nearly 64% in a five-day period last month, jumped after saying deposits stabilized after an initial drop and have increased in recent weeks. Its stock jumped 23.5%.

Other financial companies were mixed following their earnings reports.

Citizens Financial Group fell 0.3% after reporting weaker-than-expected earnings and revenue. Synchrony Financial rose 2.7% after posting better-than-expected revenue but weaker profits. Morgan Stanley rose 0.4% after beating profit and revenue forecasts.

On the losing side, Tesla, which slipped 0.6%. The electric vehicle company has slashed prices on its two best-selling models, its fourth U.S. price cut this year. This could be a signal that Tesla is trying to boost sales amid changes to U.S. tax credits for electric vehicles.

Tesla stock is also one of the most vulnerable to rising interest rates and yields rose in the bond market after a report showed UK inflation remained above double digits for a seventh consecutive month.

Central banks around the world have been raising rates at a breakneck pace for more than a year, and the Federal Reserve is widely expected to raise US short-term rates again at its meeting next month. . High rates can stifle inflation, but only by slowing down the whole economy, increasing the risk of recession and hurting investment prices.

Another fear is that small and medium banks could cut lending amid all the industry’s troubles, further dampening the economy. The Federal Reserve said Wednesday that several of its 12 regional districts had recently noticed banks tightening their lending standards.

When I look at economic growth, there are so many components of economic growth that are screaming that they were either in recession or heading in that direction, Horneman said.

She braced for more turmoil in the stock market on the belief that interest rates will remain high until the end of the year, despite traders’ expectations for rate cuts.

In the bond market, the 10-year Treasury yield rose to 3.60% from 3.58% on Tuesday evening. The two-year Treasury yield, which more closely tracks Fed expectations, rose to 4.27% from 4.20%.

In foreign markets, stock indices were mixed in Europe. Asian stocks were mostly down.

An earlier report showing that China’s economic growth accelerated in the last quarter did not have much impact on stock prices. While consumption and retail sales have increased, other indicators, such as industrial production and investment in fixed assets, have been weaker and point to an uneven recovery.

It may still be the worst story, but the recovery has been more gradual than a one-time wonder, IG market analyst Yeap Jun Rong said in a report.

AP Business Writers Yuri Kageyama and Matt Ott contributed.