NEW YORK (AP) — U.S. stock indexes edged higher Wednesday after Google’s parent company reported strong profits, but declines in stocks such as Eli Lilly and others are keeping Wall Street in check.
After bouncing between modest gains and losses, the S&P 500 rose 0.3% in intraday trading, near its all-time high set earlier this month. The Dow Jones Industrial Average was up 197 points, or 0.5%, as of noon ET, and the Nasdaq Composite Index added 0.2% to its previous record set the day before.
Alphabet rose 5.5% after its latest quarter’s profit beat analysts’ expectations, thanks largely to results from its Google business. This is the latest in a highly influential group of stocks known as the “Magnificent Seven” that have exceeded high expectations for growth. It will have to do so even as artificial intelligence technology creates a new boom, with critics saying prices are rising too quickly.
Meta Platforms and Microsoft are No. 3 and No. 4 in the Magnificent Seven and are expected to report their summer results after the day’s close. Meta rose 1.1% and Microsoft rose 1.1%.
Computer chip companies have been some of the biggest winners of the AI rush, but Advanced Micro Devices Inc. announced its latest quarterly profit narrowly matched analysts’ expectations, contributing to an industry-wide stock slide. It also provided a forecast range for sales through the end of 2024, with the midpoint slightly below analysts’ expectations. AMD stock fell 9.5%.
Nvidia, the semiconductor giant that has quickly become one of Wall Street’s biggest and most influential stocks, fell 1%, making it one of the most heavily weighted stocks in the S&P 500.
Eli Lilly, one of the few stocks that pushed the index further down, fell 6% on concerns about two of the company’s blockbuster products, diabetes drug Munjaro and weight-loss drug Zepbound.
Eli Lilly reported weaker results for its latest quarter than analysts expected, as the drug wholesaler used up inventory built up in the previous quarter. Lilly has lowered its full-year 2024 profit forecast.
Trump Media & Technology Group, which operates former President Donald Trump’s Truth Social platform, also fell. The stock fell 17.4%, its worst decline since it began to soar in late September. Stock prices of loss-making companies often move based more on expectations about President Trump’s chances of re-election than on earnings expectations.
One of the biggest movers on Wall Street, Reddit soared 40.2% after the company reported a profit that surprised investors and analysts.
Super Micro Computers lost nearly a third (32.3%) of its value after Ernst & Young resigned as its registered public accounting firm.
Prominent investor Hindenburg Research released a report in August accusing the company of accounting red flags and other problems, but CEO Charles Liang later said the report said it contained false or inaccurate statements.
Yields were mixed in the bond market after mixed data on the U.S. economy. According to preliminary U.S. government estimates, overall economic growth slowed from spring to summer. However, performance was slightly better than economists expected.
The recent hurricanes that hit the U.S. may also lead to a recovery and stronger growth in the fourth quarter, but “the signal through the noise is that the economy is still slowing, rather than reaccelerating.” “This is likely to be the case,” said Brian Jacobsen, chief economist. At Annex Wealth Management.
A separate report on Wednesday suggested that non-government employers accelerated hiring this month, when economists were predicting an economic slowdown. This could increase optimism for more comprehensive jobs data released by the U.S. government on Friday. Economists expect this will cut the pace of hiring in October by almost half.
The economic slowdown is no surprise to Wall Street, and not after the Federal Reserve raised interest rates in hopes of putting enough brakes on the economy to curb inflation. The question is whether the Fed can keep the economy out of recession now that it has begun lowering interest rates to keep the job market strong.
Those hopes were boosted by a series of better-than-expected economic reports, but investors have been forced to dial back their expectations for how far the Fed will ultimately cut interest rates. A stronger economy would require less support from lower interest rates.
The yield on the 10-year U.S. Treasury note fell slightly to 4.25% from 4.26% late Tuesday, but is still well above the 3.60% level it fell to mid-last month.
The yield on the two-year Treasury note, which is more closely tied to Fed expectations, rose slightly to 4.13% from 4.10%.
Traders largely expect the Fed to cut the federal funds rate by a quarter of a percentage point at its next meeting next week, according to data from CME Group. This would be a further step down from last month’s 0.5 percentage point cut, which started the Fed’s rate-cutting campaign.
In overseas stock markets, most European and Asian indexes fell, although Japan’s Nikkei Stock Average rose 1% as the Bank of Japan began a two-day policy meeting.
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AP writers Matt Ott and Zimo Zhong contributed.
