NEW YORK — U.S. stocks are ticking higher Thursday, helping Wall Street to erase its losses from earlier in the week.
The S&P 500 was 0.7% higher in early trading and just above its record close set last week. The Dow Jones Industrial Average was up 205 points, or 0.5%, as of 9:40 a.m. Eastern time, and the Nasdaq composite was 0.8% higher.
Federal Reserve Chair Jerome Powell is due to testify again on Capitol Hill about interest-rate policy, but the expectation is for him to just echo what he said a day before: The Federal Reserve will likely cut its main interest rate this year, after jacking it up to its highest level since 2001, but it first needs to see additional data showing inflation is cooling.
It’s a key point on Wall Street because cuts to rates would release pressure on the economy and the financial system. Traders have already shelved earlier forecasts for cuts to begin in March, and they’re now thinking June is the likeliest starting point.
Treasury yields eased in the bond market after a couple reports gave potential signals of lessened pressure on inflation, which could help convince the Fed it’s heading toward rate cuts.
One report said slightly more U.S. workers applied for unemployment benefits last week than expected, though the number remains low relative to history.
A separate report said U.S. workers were able to produce even more stuff per hour during the last three months of 2023 than expected. Such improvement is key because it can allow the economy to grow without adding as much upward pressure on inflation.
Across the Atlantic, traders were also trying to guess when the European Central Bank will begin cutting interest rates after its president said it’s making progress on getting inflation under control.
The yield on the 10-year Treasury dipped to 4.08% from 4.11% late Wednesday. It’s been steadily falling since topping 5% last autumn, which can encourage borrowing across the economy and investors to pay higher prices for stocks.
A potentially more impactful report will arrive Friday, when the U.S. government will give its latest monthly update on the job market. The hope among traders is that the job market remains healthy but not so much that it deters the Federal Reserve from cutting interest rates.
On Wall Street, American Eagle Outfitters soared 9.5% after reporting stronger profit and revenue for the latest quarter than analysts expected. The retailer also unveiled a plan to kickstarts growth in operating profit.
Kroger rose 6.7% after it reported stronger-than-expected profit for the end of 2023. It also gave a forecast range for profit in the upcoming year whose midpoint was above analysts’ estimates.
Victoria’s Secret was on the losing end even after it also reported stronger profit for the latest quarter than expected. It said it expects overall sales to fall this upcoming year, when analysts were looking for modest growth. It tumbled 25.4%.
Shares of embattled New York Community Bancorp were 12.4% higher a day after going on a wild ride. The bank, which is battling weakness in commercial real estate and growing pains resulting from its buyout of a distressed bank, announced a lifeline of more than $1 billion from a group of investors on Wednesday.
Analysts are still saying NYCB’s problems are specific to it, rather than a warning of impending doom for the broader industry, but stocks of other regional banks have been skittish. The KBW Nasdaq Regional Banking index rose 1.4%.
In stock markets abroad, indexes were modestly higher in Europe after the European Central Bank left its main interest rate alone. Japan’s Nikkei 225 index briefly reached a record in early trading before falling to a loss of 1.2%.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.