Financial Markets                      01/16 15:31

   

   NEW YORK (AP) -- U.S. stock indexes drifted lower Thursday following a mixed 
set of earnings reports from Morgan Stanley, UnitedHealth Group and other big 
companies.

   The S&P 500 slipped 0.2% after flipping between small gains and losses 
through the day. More stocks rose within the index than fell, but drops for 
some influential stocks like Tesla outweighed them.

   The Dow Jones Industrial Average dropped 68 points, or 0.2%, and the Nasdaq 
composite fell 0.9%.

   The relatively modest moves for stocks came a day after they shot higher on 
hopes that an encouraging report on inflation may convince the Federal Reserve 
to deliver more cuts to interest rates this year. Treasury yields were also 
more placid in the bond market following mixed economic reports on Thursday.

   One report showed growth for sales at U.S. retailers wasn't as strong last 
month as economists expected. Another said more U.S. workers filed for 
unemployment benefits last week, and a third said manufacturing in the 
mid-Atlantic area unexpectedly roared back to growth.

   Taken together, the trio of reports suggests the U.S. economy is nowhere 
near a recession but may be showing some signs of slowing that could keep 
pressure off inflation. Markets have been lurching down and up in recent weeks 
as economic reports force traders to revamp their expectations about what the 
Federal Reserve may do with interest rates in 2025.

   When reports have calmed worries about inflation, expectations have climbed 
for possible cuts to rates. That has typically sent Treasury yields lower and 
stock prices higher. When inflation looks to be a bigger problem, whether 
through a still-solid economy or possible policies coming from President-elect 
Donald Trump, Treasury yields have climbed, and stock prices have tended to 
sink.

   On Thursday, yields eased modestly. The yield on the 10-year Treasury fell 
to 4.61% from 4.66% late Wednesday and from 4.79% on Tuesday.

   The two-year Treasury yield, which more closely follows expectations for the 
Fed's upcoming moves, slipped to 4.23% from 4.27% late Wednesday and from 4.37% 
two days ago.

   Treasury yields are still higher than they were last autumn, though. And 
higher yields can put downward pressure on stock prices, unless companies 
deliver higher profits to make up for it.

   On Wall Street, Morgan Stanley climbed 4% after reporting stronger earnings 
for the latest quarter than analysts expected. CEO Ted Pick said investment 
banking improved in the quarter. Strong financial markets also helped its total 
client assets grow to $7.9 trillion across its wealth and investment management 
businesses.

   It followed stronger-than-expected profit reports from a bevy of banks the 
day before, including Citigroup, Goldman Sachs and Wells Fargo.

   Bank of America also delivered a profit report on Thursday that beat 
expectations, but its stock was more subdued. It fell 1%.

   U.S. Bancorp, meanwhile, fell to one of the worst losses in the S&P 500 
after reporting results for the latest quarter that fell short of analysts' 
expectations. It dropped 5.6%.

   The only stock to lose more in the index was UnitedHealth Group, which 
tumbled 6%. The insurer reported a stronger profit than expected, but its 
revenue for the latest quarter came up shy of forecasts. A rise in medical 
costs surprised analysts.

   It was the company's first financial report since the shooting of one of its 
executives outside a New York City hotel early last month.

   Another weight on the market was Tesla, which fell 3.4% on news it is 
offering discounts on its Cybertruck, the latest sign that Elon Musk's company 
is struggling to attract buyers as sales of its electric vehicle models drop 
for the first time in a dozen years.

   All told, the S&P 500 slipped 12.57 points to 5,937.34. The Dow dipped 68.42 
to 43,153.13, and the Nasdaq composite sank 172.94 to 19,338.29.

   In stock markets abroad, indexes rose across much of Europe and Asia. 
France's CAC 40 jumped 2.1%, South Korea's Kospi gained 1.2% and Hong Kong's 
Hang Seng rose 1.2% for some of the bigger gains.

   Taiwan computer chip maker Taiwan Semiconductor reported Thursday that its 
profit in the last quarter jumped 57%. The world's biggest semiconductor 
manufacturer -- which has found itself in the middle of a trade and technology 
rift between the U.S. and China -- said it results were propelled by the 
artificial intelligence boom.

   Its stock that trades in the United States rose 3.9%.

   ___

   AP Business Writers Yuri Kageyama, Matt Ott and Bernard Condon contributed.

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