US stocks drift between gains and losses in early trading

NEW YORK (AP) — Stocks are off to a weak start on Wall Street, drifting between small gains and losses in early trading Thursday. Several big tech companies underperformed, with the notable exception of Cisco Systems, which posted stronger-than-expected quarterly results. The S&P 500 was barely in the red, while the Dow Jones Industrial Average and Nasdaq fell slightly more. Energy companies were among the relatively few clear winners as the price of crude rose. European indices rose slightly and Asian markets closed lower overnight. The 10-year Treasury yield fell to 2.85%.

THIS IS A BREAKING NEWS UPDATE. Previous AP story follows below.

NEW YORK (AP) – U.S. markets moved into positive territory ahead of Thursday’s opening bell ahead of more weekly business earnings and employment data releases.

Futures for the benchmark S&P 500 and the Dow Jones Industrial Average rose 0.2% hours before the opening bell, recovering from overnight losses.

US markets fell on Wednesday after mixed earnings reports and the release of notes from the Federal Reserve’s latest meeting, where officials said inflation remains too hot despite aggressive rate hikes, suggesting support for further increases.

Even amid signs that U.S. economic growth is weakening, Fed board members during a two-day meeting late last month said inflation is “unacceptably high” and saw ” little evidence” that these pressures are easing.

Investors fear that aggressive rate hikes imposed by the Fed and central banks in Europe and Asia this year to control inflation nearing multi-decade highs could derail global economic growth.

The Fed notes raised “the prospect of further tightening,” while some investors see the possibility of “excessive tightening that drags on growth,” Mizuho Bank’s Venkateswaran Lavanya said in a report.

The Fed notes made clear that the board plans to keep raising rates, but did not say when or by how much.

The US central bank has raised its benchmark lending rate twice this year by 0.75 percentage points, triple its usual margin. Forecasters say a hike of the same size is possible at their September meeting, although the likelihood has diminished as data show the economy is weakening.

On Thursday, the government reports weekly jobless claims, which serve as an indicator of layoffs. The US labor market has shown remarkable resilience in the face of four decades of high inflation and two straight quarters of economic contraction.

In Asia, the Shanghai Composite index lost 0.5% to 3,277.54 and Tokyo’s Nikkei 225 fell 1% to 28,942.14. The Hang Seng in Hong Kong sank 0.8% to 19,763.91.

Doubts are growing on Wall Street about growth in China, with analysts citing the global economy and falling demand, as well as the country’s ongoing struggle with COVID-19.

Goldman Sachs cut its growth expectations for the year from 3.3% to 3%. Nomura, which had projected growth of 3.3%, cut its projection to 2.8%.

Beijing has a growth target of 5.5% by 2022, but indicated this summer that it may fall short.

China’s economy grew just 2.5% in the first half of 2022, less than half of what the nation’s central bank had forecast.

Also on Thursday, the US government said it would hold trade talks with Taiwan in a sign of support for the island democracy that China claims as its own territory, prompting Beijing to warn that it will take action if necessary to “safeguard its sovereignty “.

The U.S. trade representative’s announcement of the talks made no mention of the tension with Beijing, but said “formal negotiations” would develop trade and regulatory ties, a step that would involve closer official interaction.

The announcement of trade talks comes after Beijing launched missiles into the sea to intimidate Taiwan after US House Speaker Nancy Pelosi this month became the highest-ranking US official to visit the island in 25 years.

Major retailers released a mix of quarterly earnings results this week.

On Thursday, department store Kohl’s and high-end retailer Tapestry, the parent company of Coach and Kate Spade, issued guidance for the year that fell short of industry analysts’ projections. Kohl’s fell more than 8% and Tapestry fell about 1% in premarket trading.

Target fell 2.7% on Wednesday after reporting a nearly 90% drop in second-quarter profit. Walmart posted fairly strong earnings the previous day, but evidence of changes in consumer behavior due to high inflation was clear.

The Commerce Department reported on Wednesday that July retail sales were flat compared with the previous month, defying predictions of a slight increase. Retailers have warned that high inflation will discourage consumers from spending on non-essential goods.

Elsewhere, the Kospi in Seoul retreated 0.3% to 2,508.05 and Sydney’s S&P-ASX 200 was down 0.2% at 7,112.80.

India’s Sensex lost 0.3% to 60,064.94. New Zealand and Bangkok declined while Singapore and Jakarta advanced.

In midday Europe, Frankfurt’s DAX rose 0.7% and Paris’ CAC 40 gained 0.4%. London’s FTSE 100 is unchanged.

On Wall Street Wednesday, the S&P 500 fell 0.7%, erasing gains for the week. That left the index down 0.1% since Monday.

The Dow sank 0.5% and the Nasdaq 1.3%.

In energy markets, benchmark U.S. crude rose $1.06 to $89.17 a barrel in electronic trading on the New York Mercantile Exchange. It jumped $1.58 to $88.11 on Wednesday. Brent crude, the benchmark for international trade, gained $1.42 to $95.07 a barrel in London. It was up $1.31 in the previous session to $93.65.

The dollar fell to 134.92 yen from 135.05 yen on Wednesday. The euro rose to $1.0186 from $1.0169.


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