NEW YORK (AP) — Stocks are mixed Thursday as more data show the job market remains strong and worries about interest rates continue to weigh on Wall Street.
The S&P 500 was 0.1% lower in afternoon trading after paring a larger morning loss. The Nasdaq composite was also down, 0.3% lower, as another rise in yields in the bond market added more pressure on technology and high-growth stocks in particular.
The Dow Jones Industrial Average was stronger, up 138 points, or 0.4%, at 32,799, as of 1:02 p.m. Eastern time, largely because of a leap for Salesforce following a strong earnings report.
A report in the morning showed fewer workers applied for unemployment benefits last week for a third straight week. It’s the latest data to show the job market is remaining far more resilient than expected, even though the Federal Reserve has jacked up interest rates at the fastest pace in decades.
While that’s good news for workers and calms fears about a recession in the near term, the fear is that a too-strong jobs market could add upward pressure to inflation. Inflation has recently been more stubborn to cool than expected after coming down from its summertime peak.
A separate report Thursday showed that labor costs were higher than earlier reported for the last three months of 2022, while productivity was revised down. Both could also add pressure on inflation. It follows other reports over the last month showing overall job growth, spending by consumers and inflation at multiple levels of the economy all remain higher than expected.
That’s forced Wall Street to raise its forecasts for how high the Fed will ultimately take interest rates. It also means a delay in any hopes for upcoming cuts to rates. Traders are now in closer alignment with what the Fed has long been saying about keeping rates higher for longer, with many expecting the central bank to ratchet up its own forecasts later this month.
The swing has been clear in the bond market, where Treasury yields have shot higher. The yield on the 10-year Treasury rose to 4.08% from 4.00% late Wednesday and from less than 3.40% earlier this year. It helps set rates for mortgages and other loans that shape the economy, and it’s near its highest level since November.
The two-year yield, which moves more on expectations for the Fed, rose to 4.93% from 4.88% and is close to its highest level since 2007.
Higher rates can drive down inflation because they slow the economy, but they also raise the risk of a recession down the line. They likewise hurt prices for stocks and other investments.
They tend to most hurt investments seen as the riskiest, most expensive or forcing their investors to wait the longest for big growth. That’s hit technology and high-growth stocks in particular.
Telsa was helping to lead the way lower for the stock market. It sank 6.3% after saying its next generation of vehicles will cost half as much, though providing few details about its design in a presentation to investors. Hormel Foods, the company behind Spam and Applegate meats, also fell. It sank 4.5% after reporting weaker profit and revenue for the latest quarter than expected.
On the winning side was Salesforce, which topped forecasts for its profit and revenue last quarter. It also gave a stronger-than-expected forecast for upcoming results. It leaped 11.8%.
Expectations have been coming down recently for profits at big U.S. companies given still-high inflation and interest rates. But several joined Salesforce in rising Thursday after posting encouraging results.
Macy’s rose 10.1% after reporting stronger profit and revenue for the holidays than analysts expected. It also gave a forecasted range for earnings this year that was above some analysts’ expectations.
It ran counter to several other big retailers that have offered discouraging forecasts recently given the struggles of some U.S. households amid still-high inflation.
Kroger rose 3.8% after the grocer also turned in stronger profit for the latest quarter than expected.
Stock markets overseas were also mostly mixed.
New data out of Europe Thursday showed that inflation eased slightly in the 20 countries that use the euro currency but remains higher than economists expected.
AP Business Writers Joe McDonald and Matt Ott contributed.