Stock market today: Asian benchmarks mostly climb despite concerns over US economy

TOKYO (AP) Asian stocks mostly rose Friday despite concerns about the economic outlook and inflation in the United States and the rest of the world.

The Bank of Japan ended its policy meeting without major changes, keeping its benchmark interest rate within a range of 0 to 0.1 percent. In March, it raised the policy rate by minus 0.1%, citing signs that inflation had reached the central bank's target of around 2%.

Japan's benchmark Nikkei 225 index gained 0.4% in morning trading to 37,780.35, while the U.S. dollar traded at 155.54 Japanese yen, little changed from 155.58 yen .

Although a weak yen is a boon for Japanese export giants like Toyota Motor Corp., whose overseas profits are boosted when converted to yen, some Japanese officials, including Finance Minister Shunichi Suzuki, have raised concerns that too weak a currency is not good for the Japanese economy in the long term.

In other currencies, the euro costs $1.0726, compared to $1.0733.

Wall Street was lower on Thursday on concerns about a potentially toxic cocktail combining stubbornly high inflation and a declining economy. A sharp decline in the parent company of Facebook, one of the most influential stocks on Wall Street, also hurt the market.

The S&P 500 fell 0.5% to 5,048.42. The Dow Jones Industrial Average fell 1% to 38,085.80 and the Nasdaq composite fell 0.6% to 15,611.76.

Meta Platforms, the company behind Facebook and Instagram, fell 10.6% even though it reported profit for the latest quarter that was better than analysts expected. Investors have instead focused on the big investments in artificial intelligence that Meta has committed to making. AI has created a frenzy on Wall Street, but Meta is increasing its spending by also giving a forecast range for future earnings whose midpoint fell below analysts' expectations.

Expectations were high for Meta, as well as the other Magnificent Seven stocks that generated most of the stock market returns last year. They need to set a high bar to justify their high stock prices.

The broader U.S. stock market felt the pressure of another rise in Treasury yields following a disappointing report that growth in the U.S. economy slowed to an annual rate of 1.6% over the first three month of this year, compared to 3.4% at the end of 2023.

That undermined a central hope that has helped the S&P 500 hit records this year: that the economy can avoid a deep recession and sustain strong corporate profits, even if high inflation takes time to be fully brought under control.

This is what Wall Street calls a soft landing scenario, and expectations have been growing recently for a soft landing where the economy avoids a recession altogether.

Thursday's economic data will likely be revised several times as the U.S. government refines the numbers. But the weaker-than-expected growth and higher-than-expected inflation are a bit of a slap in the face to those hoping for a no-landing scenario, said Brian Jacobsen, chief economist at Annex Wealth Management.

Treasury yields continued to rise as traders reduced their bets on a rate cut this year by the Federal Reserve.

The 10-year Treasury yield rose from 4.66% just before the report was released to 4.70% and 4.65% late Wednesday.

Traders are largely betting on the possibility of one or perhaps two interest rate cuts this year from the Fed, if at all, according to CME Group data. They came into the year planning for six or more. A series of reports this year showing that inflation remains higher than expected has dashed those expectations.

Senior Fed officials have said they may keep its main interest rate at its highest level since 2001 for a while. High rates slow the overall economy and hurt investment prices, while cuts could help inflation reaccelerate.

This puts more pressure on companies to generate greater profits.

In energy trading Friday morning, benchmark U.S. crude edged up 19 cents to $83.76 a barrel. Brent crude, the international standard, gained 22 cents to $89.23 a barrel.

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AP Business Editor Stan Choe contributed.