US STOCKS-Wall Street stocks end mixed on higher Treasury yields, rate expectations

BY Reuters | ECONOMIC | 04/16/24 04:02 PM EDT

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UnitedHealth (UNH) gains on Q1 profit beat

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Fed Chair Jerome Powell sees higher rates for longer

(Updates to close of trading)

By Chibuike Oguh

April 16 (Reuters) - Wall Street stocks ended mixed on Tuesday as Treasury yields climbed, with investors weighing the likely path of interest rates in a resilient U.S. economy with persistent inflation.

Federal Reserve Chair Jerome Powell said on Tuesday recent inflation data has not given policymakers enough confidence to ease credit soon, noting that the U.S. central bank may need to keep rates higher for longer than previously thought.

The Dow Jones Industrial Average got a boost from UnitedHealth Group's (UNH) better-than-expected quarterly results.

The technology and healthcare sectors were the biggest supports for the S&P 500, while real estate was the biggest drag on the index.

"People are trying to balance this two-sided narrative: U.S. economic growth, which looks really good, and at the same time the inflation picture and interest rates, which will eventually be problematic for the equity market," said James St. Aubin, chief investment officer at Sierra Mutual Funds in California.

A report on Monday showed retail sales grew more than expected in March, a sign of U.S. economic resilience that helped push benchmark U.S. 10-year Treasury yields to five-month highs on Tuesday.

According to preliminary data, the S&P 500 lost 10.67 points, or 0.21%, to end at 5,051.15 points, while the Nasdaq Composite lost 21.94 points, or 0.12%, to 15,863.08. The Dow Jones Industrial Average rose 60.74 points, or 0.17%, to 37,799.34.

The S&P 500 and the Nasdaq are nearly 4% off from record high levels reached last month.

Shares of Morgan Stanley (MS) rose after its first-quarter profit beat estimates on resurging income from investment banking.

Bank of America (BAC) dropped after the lender posted lower first-quarter profits as its loan loss provisions grew.

Johnson & Johnson (JNJ) slipped as the drugmaker's revenue missed analysts' estimates after sales from its blockbuster psoriasis drug, Stelara, fell short of expectations.

Tesla slipped a day after falling over 5% on news that the EV marker plans to lay off more than 10% of its global workforce.

(Reporting by Chibuike Oguh in New York; additional reporting by Shashwat Chauhan and Shristi Achar A in Bengaluru; Editing by Richard Chang)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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