Stock Market Today: Wall Street Nears Record as Stocks Drift Amid Inflation Concerns

Economy

By Associated Press

Published 3 months ago on

February 18, 2025

People walk past the New York Stock Exchange on Tuesday, Nov. 26 2024. (AP File)

The S&P 500 hovers just below its all-time high as Wall Street remains optimistic despite inflation concerns.
U.S. companies plan continued AI investments despite China’s DeepSeek matching performance without top-tier chips.
Rising inflation threatens Federal Reserve rate cuts, pushing Treasury yields higher and dampening some market optimism.

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NEW YORK — Wall Street is flirting with a record again as U.S. stock indexes drift on Tuesday.

The S&P 500 was virtually unchanged in morning trading and just below its all-time closing high set last month. The Dow Jones Industrial Average was down 145 points, or 0.3%, as of 10:15 a.m. Eastern time, and the Nasdaq composite was basically flat.

Entergy jumped 6.2% and helped lead the market. The electric company, which serves customers in Arkansas, Louisiana, Mississippi and Texas, reported stronger profit for the latest quarter than analysts expected.

That helped offset an 8.2% drop for Conagra, which lowered its forecasts for upcoming profit and other financial measures. The food company said supply issues have hurt two of its product lines: frozen meals containing chicken and frozen vegetables.

Stock Market Climbs Toward Record Height

U.S. stocks have broadly climbed back toward record heights even though big recent disruptions seemed set to derail their long, upward trend that began in 2022.

Hanging over everything has been the threat of a punishing global trade war following President Donald Trump’s announcements of tariffs. But Wall Street has been taking such actions increasingly in stride, believing they are merely tools for negotiations and that they’ll ultimately prove to be less painful for markets and the economy than they may seem initially.

Then there’s DeepSeek, the Chinese artificial-intelligence startup that said it was able to match the performance of big U.S. rivals without having to use top-of-the-line chips. That raised worries that the deluge of investment flowing into AI development may pull back and choke off an area of the market that’s been responsible for its stellar gains in recent years.

But big U.S. companies have since said in recent weeks they still plan to invest billions of dollars in AI, even with DeepSeek’s disruption.

Such optimism has global fund managers feeling so confident that they’re piling into stocks and holding only 3.5% of their portfolios in the safety of cash, according to a survey by Bank of America. That’s the lowest since 2010, strategist Michael Hartnett said in a BofA Global Research report.

Helping to support the fervor has been strong profit reports from Entergy and other big U.S. businesses. Companies in the S&P 500 are on track to deliver nearly 17% growth in their earnings per share for the final three months of 2024 compared to a year earlier. That would be the best growth since 2021, according to FactSet.

Threats Linger Over Stock Market

Still, threats continue to hang over the stock market. Last week, two reports showed inflation unexpectedly worsened across the United States last month. Such stubborn inflation may force a halt to the Federal Reserve’s cuts to interest rates, which began in September in order to take pressure off the economy and help the job market.

Traders have been paring their expectations for possible cuts to rates through 2025, with an increasing number saying they foresee zero. That in turn has pushed up Treasury yields in the bond market, which typically drag downward on prices for stocks and other investments.

Treasury yields rose again Tuesday, with the yield on the 10-year Treasury rising to 4.51% from 4.48% late Friday. Like the stock market, bond trading was closed Monday in observance of the Presidents Day holiday.

With Treasury yields no longer helping stock prices, Morgan Stanley strategist Michael Wilson suggests winning stocks and industries could separate themselves even if the overall market looks calm and restrained. He points to areas of the market seeing stronger momentum for earnings, such as financial companies.

In stock markets abroad, indexes were modestly higher across much of Europe and Asia. Stocks jumped 1.6% in Hong Kong for one of the bigger gains after Chinese President Xi Jinping met with entrepreneurs Monday, including Alibaba founder Jack Ma, in a signal of assurance following a crackdown on the technology industry in recent years.