Stock market today: Asian shares mostly fall after Wall Street drop, Tokyo hits new 34-year high

By YURI KAGEYAMA
AP Business Writer

TOKYO (AP) — Asian shares were trading mostly lower Wednesday after a decline overnight on Wall Street, while Tokyo’s main benchmark momentarily hit another 30-year high.

Japan’s benchmark Nikkei 225 gained 0.9% in morning trading to 35,935.59. The Nikkei has been hitting new 34-year highs, or the best since February 1990 during the so-called financial “bubble.” Buying focused on semiconductor-related shares, and a cheap yen helped boost exporter issues.

Australia’s S&P/ASX 200 slipped 0.2% to 7,401.30. South Korea’s Kospi dropped 1.4% to 2,463.12. Hong Kong’s Hang Seng dove nearly 2% to 15,550.65. The Shanghai Composite shed 0.6% to 2,877.44.

Investors were keeping their eyes on upcoming earnings reports, as well as potential moves by the world’s central banks, to gauge their next moves.

Wall Street slipped in a lackluster return to trading following a three-day holiday weekend.

The S&P 500 fell 17.85 points, or 0.4%, to 4,765.98. The Dow Jones Industrial Average dropped 231.86, or 0.6%, to 37,361.12, and the Nasdaq composite sank 28.41, or 0.2%, to 14,944.35.

Spirit Airlines lost 47.1% after a U.S. judge blocked its takeover by JetBlue Airways on concerns it would mean higher airfares for flyers. JetBlue rose 4.9%.

Stocks of banks were mixed, meanwhile, as earnings reporting season ramps up for the final three months of 2023. Morgan Stanley sank 4.2% after it said a legal matter and a special assessment knocked $535 million off its pretax earnings, while Goldman Sachs edged 0.7% higher after reporting results that topped Wall Street’s forecasts.

Companies across the S&P 500 are likely to report meager growth in profits for the fourth quarter from a year earlier, if any, if Wall Street analysts’ forecasts are to be believed. Earnings have been under pressure for more than a year because of rising costs amid high inflation.

But optimism is higher for 2024, where analysts are forecasting a strong 11.8% growth in earnings per share for S&P 500 companies, according to FactSet. That, plus expectations for several cuts to interest rates by the Federal Reserve this year, have helped the S&P 500 rally to 10 winning weeks in the last 11. The index remains within 0.6% of its all-time high set two years ago

Treasury yields have already sunk in the bond market on expectations for upcoming cuts to rates, which traders believe could begin as early as March. It’s a sharp turnaround from the past couple years, when the Federal Reserve was hiking rates drastically in hopes of getting high inflation under control.

Easier rates and yields relax the pressure on the economy and financial system, while also boosting prices for investments. And for the past six months, interest rates have been the main force moving the stock market, according to Michael Wilson, strategist at Morgan Stanley.

He sees that dynamic continuing in the near term, with the “bond market still in charge.”

For now, traders are penciling in many more cuts to rates through 2024 than the Fed itself has indicated. That raises the potential for big market swings around each speech by a Fed official or economic report.

Yields rose in the bond market after Fed Gov. Christopher Waller said in a speech that “policy is set properly” on interest rates. Following the speech, traders pushed some bets for the Fed’s first cut to rates to happen in May instead of March.

On Wall Street, Boeing fell to one of the market’s sharper losses as worries continue about troubles for its 737 Max 9 aircraft following the recent in-flight blowout of an Alaska Airlines jet. Boeing lost 7.9%.

In energy trading, benchmark U.S. crude lost 53 cents to $71.87 a barrel. Brent crude, the international standard, fell 51 cents to $77.78 a barrel.

In currency trading, the U.S. dollar edged up to 147.29 Japanese yen from 147.09 yen. The euro cost $1.0877, little changed from $1.0880.

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AP Business Writer Stan Choe contributed. Yuri Kageyama is on X https://twitter.com/yurikageyama

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AP Business Writer Stan Choe contributed.