Eli Lilly reported weaker results for the latest quarter than analysts expected, as pharmaceutical wholesalers burned through inventories they had built up in previous quarters. Lilly cut its forecast for profit over the full year of 2024.
Also falling was Trump Media & Technology Group, the company behind former Donald Trump’s Truth Social platform. It dropped 20.5 per cent, which would be its worst loss since it began rocketing higher in late September. The stock of the money-losing company often moves more on expectations for Trump’s re-election chances than on its profit prospects.
Among the biggest movers on Wall Street, Reddit soared 38.5 per cent after the company surprised investors and analysts and reported a profit.
Super Micro Computer lost a third of its value, 33.9 per cent, after Ernst & Young resigned as its registered public accounting firm.
A prominent investor, Hindenburg Research, published a report in August that accused the company of accounting red flags and other issues, which CEO Charles Liang later said contained false or inaccurate statements.
In the bond market, yields were mixed following a jumbled set of data on the US economy. Growth for the overall economy slowed during the summer from the spring, according to a preliminary estimate by the US government. But the performance was slightly better than economists expected.
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Recent hurricanes that struck the United States could also lead to rebuilding that causes stronger growth in the fourth quarter but “the signal through the noise will likely be one of an economy that is still slowing, not reaccelerating,” according to Brian Jacobsen, chief economist at Annex Wealth Management.
A separate report on Wednesday suggested employers outside the government accelerated their hiring this month, when economists were forecasting a slowdown. It could raise optimism for Friday’s more comprehensive jobs report coming from the US government. Economists expect that to show the pace of hiring nearly halved in October.
A slowing economy is no surprise for Wall Street, not after the Federal Reserve hiked interest rates in hopes of braking enough on the economy to get inflation under control. The question is whether the Fed can help keep the economy out of a recession, now that it’s begun cutting interest rates to keep the job market humming.
A string of stronger-than-expected reports on the economy has raised those hopes, but it’s also forced investors to ratchet back their expectations for how deeply the Fed will ultimately cut rates. A more solid economy would not require as much help through lower rates.
The yield on the 10-year Treasury edged down to 4.25 per cent from 4.26 per cent late Tuesday, though it’s still well above the 3.60 per cent level it fell to in the middle of last month.
The two-year Treasury yield, which moves more closely with expectations for Fed action, edged up to 4.14 per cent from 4.10 per cent.
Traders are largely expecting the Fed to cut its federal funds rate by a quarter of a percentage point at its next meeting next week, according to data from CME Group. That would be a step down from its cut of half a percentage point last month, which kicked off the Fed’s rate-easing campaign.
In stock markets abroad, indexes were mostly lower in Europe and Asia despite a 1 per cent rise for Japan’s Nikkei 225 as the Bank of Japan began a two-day policy meeting.
