Financial Markets                      04/16 15:41

   

   NEW YORK (AP) -- Most U.S. stocks slipped Tuesday, and Treasury yields rose 
on expectations that interest rates may stay high for a while.

   The S&P 500 fell 10.41 points, or 0.2%, to 5,051.41. The index deepened its 
loss from the day before, when it sank under the pressure brought by a jump in 
Treasury yields. The Dow Jones Industrial Average rose 63.86, or 0.2%, to 
37,798.97, and the Nasdaq composite fell 19.77, or 0.1%, to 15,865.25.

   A 5.2% climb for UnitedHealth helped support the market after the insurer 
reported stronger results for the first three months of the year than analysts 
expected. Morgan Stanley was another winner, rising 2.5%, after likewise 
topping expectations.

   But the majority of stocks fell as Treasury yields rose following comments 
by Federal Reserve Chair Jerome Powell. They've been climbing rapidly as 
traders give up hopes that the Fed will deliver many cuts to interest rates 
this year. High rates hurt prices for all kinds of investments and raise the 
risk of a recession in the future.

   Powell said at an event Tuesday that the central bank has been waiting to 
cut its main interest rate, which is at its highest level since 2001, because 
it first needs more confidence inflation is heading sustainably down to its 2% 
target.

   "The recent data have clearly not given us greater confidence and instead 
indicate that it's likely to take longer than expected to achieve that 
confidence," he said, referring to a string of reports this year that showed 
inflation remaining hotter than forecast.

   He suggested if higher inflation does persist, the Fed will hold rates 
steady "for as long as needed." But he also acknowledged the Fed could cut 
rates if the job market unexpectedly weakens.

   Treasury yields climbed immediately after Powell's comments. They had 
already been higher after the Fed's vice chair made similar comments earlier in 
the day.

   Philip Jefferson said his expectation is for inflation to keep easing and 
for the Fed to hold its main rate "steady at its current level." That 
contrasted with his remarks in February, when he said "it will likely be 
appropriate to begin dialing back policy restraint at some point this year" if 
things went as he expected.

   The yield on the two-year Treasury, which tracks expectations for Fed 
action, shot as high as 5% immediately after Powell spoke and got back to where 
it was in November.

   But yields later pared their gains as the afternoon progressed, and the 
two-year yield drifted back to 4.98%. That's still up from 4.91% late Monday.

   Traders are mostly betting on the Fed delivering just one or two cuts to 
interest rates this year after coming into 2024 expecting six or more. They're 
now also betting on a 12.5% probability that no cuts are coming, up from just 
1.2% a month ago, according to data from CME Group.

   The threat of rates staying high for longer hit real-estate investment 
trusts and utility stocks particularly hard. They pay relatively high dividends 
and tend to attract the same kind of investors as bonds do. When bonds are 
paying higher yields, income-seeking investors may camp there instead.

   Real-estate stocks fell 1.5% for the largest loss among the 11 sectors that 
make up the S&P 500. Utilities weren't far behind with a loss of 1.4%.

   High rates can also translate into more expensive mortgages, and stocks of 
homebuilders slumped after a report showed they broadly broke ground on fewer 
sites last month than economists expected. Lennar fell 2.3%, and D.R. Horton 
sank 2%.

   Northern Trust slumped 5% after the financial services company reported 
weaker earnings for the start of the year than analysts expected. Johnson & 
Johnson sank 2.1% despite topping profit forecasts. Its revenue came in a 
whisper below expectations.

   Companies are under even more pressure than usual to report fatter profits 
and revenue because the other lever that sets stock prices, interest rates, 
looks unlikely to add much lift soon.

   The stock of Donald Trump's social-media company also slumped again. Trump 
Media & Technology Group fell another 14.2% to follow up on its 18.3% slide 
from Monday.

   The company said it's rolling out a service to stream live TV on its Truth 
Social app, including news networks and "other content that has been cancelled, 
is at risk of cancellation, or is being suppressed on other platforms and 
services."

   The stock has dropped below $23 after nearing $80 last month as euphoria 
fades around the stock and the company made moves to clear the way for some 
investors to sell shares.

   In markets abroad, stock indexes tumbled across Asia and Europe as they 
caught up with the drubbing Wall Street took on Monday. Stock indexes fell 2.1% 
in Hong Kong, 2.3% in Seoul and 1.8% in London.

   ___

   AP Business Writers Matt Ott and Elaine Kurtenbach contributed.

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