Stock market today Wall Street steadies bank stocks rise

     New York, May 8 (AP) Wall Street is holding relatively steady Monday coming off its worst week in nearly two months, as stocks of several beaten-down banks rally.
     The S&P 500 was virtually unchanged in early trading. The Dow Jones Industrial Average was edging down by 16 points, or less than 0.1 per cent, at 33,657, as of 9:45 a.m. Eastern time, while the Nasdaq composite was 0.2 per cent lower.
     Besides a strong reading on US jobs, which calmed worries about a possible recession but raised concerns about high inflation, last week was dominated by fears about smaller and mid-sized banks.
     PacWest Bancorp jumped 20.7 per cent Monday to recover some of its steep 43 per cent plunge last week. It said on Friday night that it's cutting its dividend to help it build its financial strength. Several other smaller- and mid-sized banks also rose, including a 6.8 per cent rise for Western Alliance Bancorp.
     They've been under heavy pressure as Wall Street hunts for the next weak link following the failures of three US banks since March. Weighed down by much higher interest rates, banks are scrambling to assure Wall Street their deposits are secure and not at threat of seeing a sudden exodus, similar to the runs that toppled Silicon Valley Bank and others.
     The larger concern for markets is that all the turmoil for banks could cause them to pull back on their lending. That in turn could mean businesses get fewer opportunities to grow and households face more financial pressure, raising the risk of a recession that many investors already see as highly likely.
     The Federal Reserve later on Monday will offer more details on the banking system when it releases the results of its quarterly survey of senior loan officers. It will show whether banks are indeed making it tougher for borrowers to get loans.
     Weighing down on Wall Street were stocks of companies that turned in worse results for the first three months of the year than expected.
     Tyson Foods tumbled 12.5 per cent after it reported a loss for the latest quarter, instead of the profit that analysts had forecast. Its revenue also fell short of expectations.
     Dish Network dropped 1.1 per cent after reporting results that were a bit below forecasts.
     They're against the broader trend of this earnings reporting season, where the majority of companies have topped forecasts. Apple was the highlight of last week, and its better-than-expected report helped the market immensely because its stock is Wall Street's largest and packs the most weight on the S&P 500 and other indexes.
     Expectations were quite low, though, given high interest rates and a slowing economy. Like Apple, companies across the S&P 500 are on track to report a drop in profit for the latest quarter versus a year earlier. Nearly 80 per cent of companies in the index have reported, and they're on pace for a 2.2 per cent decline, versus expectations for a 6.7 per cent drop, according to FactSet.
     In an encouraging signal, more companies than usual have been offering forecasts for upcoming results that were above Wall Street's expectations. The ratio of such pre-announcements it at its strongest level in two years, equity strategist Savita Subramanian said in a BofA Global Research report, and analysts expect earnings growth to resume in the third quarter of this year.
     That's helped to steady stocks despite all the worries about much higher interest rates. The S&P 500 has been roughly churning in place since early April. It hasn't had a weekly gain or loss of at least 1 per cent since March, its longest stretch in nearly two years, said Chris Larkin, managing director, trading and investing, at E-Trade from Morgan Stanley.
     The Federal Reserve has catapulted its benchmark interest rate to a range of 5 per cent to 5.25 per cent, up from virtually zero early last year, in hopes of slowing high inflation. High rates do that by slowing the economy and hurting prices for investments, which runs the risk of causing a recession if they stay too high for too long.
     The Fed said last week that it's not sure of its next move, as swaths of the economy have shown sharp slowdowns but the job market remains largely resilient.
     Also hanging over the economy is the threat of a default by the US government on its debt. If Congress doesn't allow the federal government to increase its maximum limit for borrowing, a default could happen as quickly as June 1.
     Such an event would rock financial markets because US Treasurys are seen as the safest possible investment in the world. Treasury Secretary Janet Yellen said on ABC's “This Week” on Sunday that there are “no good options” for the United States to avoid an economic “calamity” if Congress fails to raise the nation's borrowing limit of USD 31.381 trillion in the coming weeks.
     In the bond market, the yield on the 10-year Treasury rose to 3.50 per cent from 3.44 per cent late Friday. It helps set rates for mortgages and other important loans.
     The two-year Treasury, which moves more on expectations for Fed action, rose to 3.96 per cent from 3.92 per cent.
     Later this week, the US government will give the latest monthly updates on inflation at the consumer and wholesale levels. Earnings reports will also arrive from Duke Energy, The Walt Disney Co. and News Corp. (AP)
    
GRS

(This story has not been edited by THE WEEK and is auto-generated from PTI)