Stocks pull back on Wall Street as earnings reports roll in | lifestyle

NEW YORK (AP) — Wall Street is giving back some of the gains from its strong start to the year on Friday as the earnings season gets under way and CEOs show how much they are being hurt by high inflation and a slowing economy.

The S&P 500 index was 0.7% lower in early trading, on pace for its first loss in four days. The Dow Jones industrial average was down 213 points, or 0.6%, at 33,976 by 9:37 a.m. ET, and the Nasdaq was down 0.6%.

All indices are still on track to hold on to gains for this week and for 2023 so far. This year began on Wall Street with optimism that cooling inflation across the country could prompt the Federal Reserve to ease off on a sharp rate hike soon. Such increases can reduce inflation, but they do so by slowing the economy and risking a recession. They also hurt investment prices.

Slowing parts of the economy and still high inflation drag on profits for companies, which are one of the main levers that determine stock prices. Shares of banks and other financial companies helped lead Wall Street lower on Friday after several of the industry’s biggest names reported results for the final three months of the year.

Wells Fargo fell 3.6% after reporting weaker-than-expected sales. JPMorgan Chase fell 1.2% despite reporting better-than-expected profit and revenue. Some investors may have been disappointed by her forecast for some key results in the first three months of this year.

Delta Air Lines fell 6.3% after issuing a forecast that also landed with a thud. Despite better-than-expected results at the end of 2022, its earnings forecast this quarter fell short of analysts’ expectations.

Government bond yields held relatively steady, but could be set for larger swings later in the morning. A report showing just how much inflation American households are bracing for in the coming years should arrive soon.

The Federal Reserve has tried to keep that number low. Otherwise, it could create a vicious cycle that only worsens inflation. Consumers could start speeding up their purchases in hopes of preempting higher prices, for example, which would only push prices higher.

The yield on the 10-year Treasury note fell to 3.43% from 3.45% late Thursday. The two-year yield, which tends to move more in line with Fed expectations, fell to 4.13% from 4.15%.

AP Business Writer Elaine Kurtenbach contributed.

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