Stocks finished mixed on Tuesday amid falling Disney shares and hopes of an interest rate cut.
The Dow Jones Industrial Average edged up 31.99 points, or 0.08%, to close at 38,884.26, while the S&P 500 gained 0.13% to finish at 5,187.70, while the Nasdaq Composite slipped 0.1% and closed at 16,332.56.
Disney finished down 9.5% to $105.39 after the entertainment giant beat quarterly earnings expectation, but missed on revenue.
Peloton finished up 15.5% to $4.09 following reports that private equity firms have been considering a buyout of the fitness company.
Updated at 3:15 PM EDT
Stocks turned mixed on Tuesday amid falling Disney shares and hopes of an interest rate cut.
The Dow was up 0.7% to 38,878.98, while the S&P 500 gained 0.09% to 5,185.50 and the Nasdaq slipped 0.09% to 16,335.51.
MarketWatch reports that Neel Kashkari, president of the Minneapolis Federal Reserve Bank, told the Milken Institute Global Conference that he can't rule out the prospect that the Fed's next move would be a rate increase.
The executive said that he would support a rate hike if inflation starts to appear entrenched, the news service reported. But he quickly added that a rate rise was not his base case.
Kashkari said the most likely scenario was that the Fed would stand pat and hold rates where they are "for an extended period."
Updated at 12:33 PM EDT
Stocks were slightly higher Tuesday as investors continued to hope the Fed would cut interest rates in the near future.
The Dow was up 0.12% to 38,900.25, while the S&P 500 gained 0.29% to 5,195.52 and the Nasdaq rose 0.23% to 16,387.24
TikTok is suing the United States government in an effort to stop enforcement of a bill passed last month that seeks to force the app’s Chinese owner to sell the app or have it banned, CNBC reported.
The lawsuit, filed Tuesday in the U.S. Court of Appeals for the D.C. Circuit, argues that the bill, the Protecting Americans from Foreign Adversary Controlled Applications Act, violates constitutional protections of free speech.
Check back for updates throughout the trading day
Stocks edged higher on Tuesday amid concerns about risks tied to the U.S. economy and to events in the Middle East.
The Dow Jones Industrial Average gained 49 points, or 0.13%, to 38,901, while the S&P 500 rose 0.21% and the Nasdaq Composite advanced 0.13%.
On Monday stocks ended their fourth winning day in a row with the Dow up 0.46%, the S&P 500 up 0.01% and the Nasdaq Composite was down 0.16%.
Federal Reserve Bank of Richmond President Thomas Barkin said he expects high interest rates to slow the economy further and cool inflation to the central bank’s 2% target https://t.co/vWfo7syJuF
— Bloomberg (@business) May 6, 2024
The strength was prompted by hopes that the Federal Reserve would cut interest rates.
Regarding rates, Thomas Barkin, president of the Richmond Federal Reserve Bank, said he expected high interest rates would slow the economy further and bring inflation to the central bank’s 2% target, Bloomberg reported.
Federal Reserve Bank of Richmond
Barkin, who within the Fed has a vote on monetary policy in 2024, said on Monday that the strong U.S. labor market gave the central bank leeway to wait to see that inflation was moving sustainably lower before it cut borrowing costs.
But he also cited the risk that higher housing and services costs would keep broader inflation elevated, Bloomberg reported.
"The full impact of higher rates is yet to come,” Bloomberg quoted him as saying.
Last week, the Federal Reserve left its benchmark interest rate unchanged at a more than two-decade high of a range of 5.25% to 5.5%. It's been there since last July.
In the Middle East, reports say that Hamas has accepted a cease-fire proposal for the Gaza Strip but Israel's cabinet has rejected the plan, which came from Qatar and Egypt. Israel said the plan wasn’t in line with what mediators had worked out.
Disney swings to loss; streaming closer to profit
Among notable market movers, Walt Disney (DIS) shares were about 9% lower. The entertainment and theme-park giant swung to a fiscal-second-quarter net loss of a penny a share on a GAAP basis from year-earlier earnings of 69 cents a share.
On an adjusted basis, the company reported earnings of $1.21 against year-earlier profit of 93 cents. CNBC reported that LSEG analyst estimates for the group were adjusted earnings of $1.10 a share on revenue of $22.08 billion.
In a statement, Disney attributed the loss to impairments of goodwill, partly offset by higher operating profit within the Entertainment and Experiences groups.
MarketWatch reported that Disney's streaming business remains unprofitable but is closer to turning around.
The direct-to-consumer streaming business reported an $18 million operating loss in the quarter, narrowed from losses of $216 million loss in the fiscal first quarter and a $659 million loss in the year-earlier fiscal Q2.
Disney's direct-to-consumer entertainment business posted $47 million of operating profit while the sports DTC business lost $65 million.
Palantir slides, Peloton surges
Palantir (PLTR) shares slumped 12% at last check on Tuesday. The data-integration and software provider reported adjusted first-quarter earnings of 8 cents per share, matching the LSEG estimate.
Revenue rose 21% to $634.3 million from $525.2 million and surpassing the LSEG forecast of $625 million.
Barron's reported that Q1 revenue in the US commercial segment grew 40% from a year earlier and 14% from Q4 to $150 million. That growth was down from a 70% rate in Q4.
At the same time the stock has more than tripled over the past year, and Barron's suggested that the negative market move might be tied in part to that revenue easing.
Peloton PTON shares leaped nearly 15%. The provider of connected-fitness equipment and services is the subject of buyout interest from private-equity firms, people familiar with the matter told CNBC.
The PE firms that might be interested weren't specified in the CNBC report. Peloton declined comment to CNBC.
Last week Peloton said that it would restructure, in an effort to cut expenses by more than $200 million a year. CEO Barry McCarthy stepped down and the company announced a 15% job cut, about 400 staffers.
Demand for at-home exercise equipment, particularly the costly gear that Peloton offers, has weakened since the pandemic eased.
