Wall Street Steadier After Worst Tumble in Months

NEW YORK (AP) -- U.S. stocks are holding steadier Thursday following their worst tumble in months.

The S&P 500 was 0.5% higher in early trading. The Dow Jones Industrial Average was up 83 points, or 0.2%, as of 9:45 a.m. Eastern time, and the Nasdaq composite was 0.7% higher.

Stocks got some relief from an easing of yields in the bond market following the release of a couple reports on U.S. workers. The data could give the Federal Reserve more of the evidence it wants of a slowdown in inflation before it will deliver the cuts to interest rates that investors desire so much. A day earlier, stocks fell sharply after the Fed's chair warned it doesn't have enough such evidence yet.

Lower bond yields help all kinds of investments, and they tend to benefit high-growth stocks in particular. That helped tech stocks recover some of their sharp tumble a day before, when Alphabet and Microsoft sank despite reporting stronger profits for the latest quarter than analysts expected.

Microsoft rose 1.8% a day after falling 2.7%. Google's parent company, Alphabet, added 1.4% after tumbling 7.5%

Big Tech stocks are facing very high expectations after they soared much more than the rest of the market last year, carrying the S&P 500 to records recently. Apple, Amazon and Meta Platforms will report their latest results after trading ends for the day. They'll also need to deliver big numbers to justify their big runs higher.

Royal Caribbean rose 4.2% after reporting stronger profit for the latest quarter than analysts expected. Align Technology, the maker of Invisalign teeth aligners, jumped 10.4% after it topped expectations for both profit and revenue. Merck climbed 3% after likewise reporting profit and revenue that beat analysts' estimates.

On the losing end of Wall Street, Metlife sank 3.7% despite reporting stronger profit and revenue than Wall Street expected to see. Analysts pointed to its forecast for 2024, where the insurer put some numbers on challenges it had previously discussed.

Peloton Interactive fell 9% after it gave a forecast for upcoming revenue that fell short of analysts' expectations. That was despite it roughly matching forecasts for the latest quarter.

New York Community Bancorp. fell another 2.3% after plunging 37.7% a day before, when it reported a much larger quarterly loss than expected and cut its dividend to build its financial strength. The surprising report caused stocks of other regional banks to tumble, reminiscent of the banking crisis last year that led to the collapse of Silicon Valley Bank, Signature Bank and others.

New York Community Bancorp. had acquired much of Signature, and analysts say much of its struggles are because of factors related to that. But its losses tied to commercial real estate serve as a reminder of challenges facing the entire industry. The KBW Nasdaq Regional Bank index was holding steadier, down 0.5%, following Wednesday's tumble of 6%.

In the bond market, the yield on the 10-year Treasury fell to 3.88% from 3.92% late Wednesday.

It sank after one report showed that slightly more workers applied for unemployment benefits last week than expected. While no one wants workers to lose their jobs, the number is still low relative to history. And Wall Street wants to see a cooldown in the job market, which could keep a lid on inflationary pressures.

A separate report offered similar encouragement for traders. It said U.S. workers were much more productive in the last three months of 2023 than expected, producing more stuff per hour worked. Strong growth in productivity could allow workers to get bigger raises in pay without adding more pressure on inflation.

"If companies can generate strong productivity growth, they will be able to control costs and protect margins without sacrificing talent in an environment of still-elevated wages and fading pricing power," said EY Chief Economist Gregory Daco.

Traders are increasingly betting the Federal Reserve will begin cutting interest rates in May, after pushing back expectations from March. Whenever it does begin, it would mark a sharp turnaround after the Fed hiked its main interest rate to the highest level since 2001 in hopes of getting inflation under control.

High interest rates intentionally slow the economy, and they undercut prices for investments.

In stock markets abroad, London's FTSE 100 added 0.2% after the Bank of England said it's keeping its main interest rate at a near 16-year high as inflation in Britain unexpectedly rose to 4% in December.

Indexes were mixed across Europe and Asia.