Wall Street holds steady following mixed profit reports from McDonald's, Disney and Shopify
The S&P 500 was up 0.2 per cent in early trading. The Dow Jones Industrial Average was up 18 points, or less than 0.1 per cent, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.4 per cent higher.
McDonald's and Shopify rose following their profit reports, while Super Micro Computer tumbled after its earnings and revenue for the latest quarter came in below analysts' expectations. Disney fell after its earnings beat forecasts but its revenue fell short
The mixed trading continues a cooldown for the U.S. stock market after it swung from its worst day since May on Friday to its best since May on Monday. Worries are high that U.S. President Donald Trump's tariffs may be hurting the economy, but hopes for coming cuts to interest rates by the U.S. Federal Reserve and a parade of stronger-than-expected profit reports from U.S. companies have helped steady the market.
McDonald's climbed 2.5 per cent after the restaurant chain reported stronger profit and revenue for the spring than analysts expected. Its U.S. locations benefited from customers paying more at each of their visits, while a meal tied to the 'Minecraft' movie proved to be a hit.
Shopify jumped 22.4 per cent after the company, which helps businesses sell on the internet, said it made more in revenue last quarter than expected. Analysts also said the company's forecast for revenue in the current quarter suggests the strong trends are continuing.
Arista Networks was one of the strongest forces lifting the S&P 500 and leaped 14.8 per cent after the networking company delivered a bigger profit for the latest quarter than expected. Its forecast for revenue in the current quarter also topped forecasts.
They helped offset a 16.9 per cent drop for Super Micro Computer, which gave back some of the huge gains the server maker has made recently. Super Micro came into the day with a nearly 88 per cent gain for its stock so far this year, but it reported weaker profit and revenue for the latest quarter than analysts expected. It also gave a forecast for profit in the current quarter that fell short of what Wall Street had penciled in.
Chip company Advanced Micro Devices fell 5.3 per cent after its profit for the latest quarter only matched analysts' expectations. Analysts said the company's financial forecasts for upcoming results also looked solid, but that may not have been enough for investors after its stock had already soared 44.3 per cent for the year so far coming into the day.
Disney dropped 4.2 per cent after its profit beat forecasts but its revenue fell short. The NFL also announced that it had entered into a nonbinding agreement with Disney's ESPN, which will give the sports broadcaster the NFL Network, NFL Fantasy and the rights to distribute the RedZone channel. The NFL will get a 10 per cent stake in ESPN in the proposed deal.
Companies are under pressure to deliver bigger profits in order to justify the big gains their stock prices have made since the U.S. market hit a low point in April. The S&P 500 is just a bit below its record, which was set late last month, and the big rally fueled criticism that the broad market has become too expensive.
In the bond market, U.S. Treasury yields also held relatively steady.
The yield on the 10-year Treasury remained at 4.22 per cent, where it was late Tuesday. It's still well below where it was late last week, before a much weaker-than-expected report on the U.S. job market ignited worries that Trump's tariffs are pushing employers to hold back on hiring.
That report has traders on Wall Street betting heavily that the Federal Reserve will need to cut interest rates at its next meeting in September. Such cuts can give investment prices and the economy a boost, but they also can push inflation higher.
In stock markets abroad, indexes rose modestly across much of Europe and Asia.
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AP business writers Yuri Kageyama and Matt Ott contributed.
By Stan Choe
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