Tag: The Bank Of Japan

Asian shares higher in thin holiday trading

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BANGKOK — Shares rose Monday in Asia in thin post-Christmas holiday trading, with markets in Hong Kong, Sydney and several other places closed.

Tokyo’s Nikkei 225 index gained 0.6% to 26,393.32 and the Kospi in Seoul added 0.2% to 2,318.54. The Shanghai Composite index rose 0.5% to 3,061.93 and the SET in Bangkok added 0.6%.

Bank of Japan Gov. Haruhiko Kuroda indicated in a widely watched speech Monday that the central bank does not intend to alter its longstanding policy of monetary easing to cope with pressures from inflation on the world’s third-largest economy.

Last week, markets were jolted by a slight adjustment in the target range for the yield of long-term Japanese government bonds, viewing it as a sign the Bank of Japan might finally unwind its massive support for the economy through ultra-low interest rates and purchases of bonds and other assets.

A widening gap between interest rates in Japan and other countries has pulled the Japanese yen sharply lower against the U.S. dollar and other currencies and accentuated the impact of higher costs for many imported products and commodities.

But the BOJ has kept its key lending rate at minus 0.1%, cautious over risks of recession.

Kuroda told the Keidanren, the country’s most powerful business group, that with economies facing likely downward pressure, and with Japan’s economy not fully recovered from the impacts of the pandemic, the BOJ “deems it necessary to conduct monetary easing and thereby firmly support the economy. …”

On Friday, the S&P 500 reversed a 0.7% loss to close 0.6% higher, at 3,844.82. With one week left of trading in 2022, the benchmark index is down 19.3% for the year.

The Dow Jones Industrial Average rose 0.5% to 33,203.93, while the tech-heavy Nasdaq edged 0.2% higher, to 10,497.86.

Small company stocks also rose. The Russell 2000 index picked up 0.4% to 1,760.93.

Mixed economic news weighed on stocks early on, but the indexes rebounded by late afternoon amid relatively light trading ahead of the long holiday weekend. U.S. and European markets will be closed Monday.

Markets are in a tricky situation where relatively solid consumer spending and a strong employment market reduce the risk of a recession but also raise the threat of higher interest rates from the Federal Reserve as it presses its campaign to crush inflation.

The government reported Friday that a key measure of inflation is continuing to slow, though the inflation gauge in the consumer spending report was still far higher than anyone wants to see. Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected.

Last week’s reports were the last big U.S. economic updates of the year. Investors will soon turn their focus to the next round of corporate earnings.

The Fed has said it will keep raising interest rates to tame inflation, even though the pace of price increases has continued to ease. The Fed’s key overnight rate is at its highest level in 15 years, after beginning the year at a record low of roughly zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast that the rate will reach a range of 5% to 5.25% by the end of 2023.

Given the persistence of high inflation, “many are starting to believe the main story is that there will be no scope for Fed cuts in the year ahead and that central banks will maintain these relatively high rates until underlying inflation is truly cracked — and that process will take time,” Stephen Innes of SPI Asset Management said in a commentary.

The Fed’s forecast doesn’t call for a rate cut before 2024, and the higher rates have raised concerns the economy could stall and slip into a recession in 2023. High rates have also been weighing heavily on prices for stocks and other investments.

In currency dealings, the U.S. dollar slipped to 132.62 Japanese yen from 132.82 yen late Friday. The euro rose to $1.0629 from $1.0614.

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December 25, 2022
Asian shares higher in thin holiday trading

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BANGKOK — Shares rose Monday in Asia in thin post-Christmas holiday trading, with markets in Hong Kong, Sydney and several other places closed.

Tokyo’s Nikkei 225 index gained 0.5% to 26,367.40 and the Kospi in Seoul added 0.2% to 2,317.48. The Shanghai Composite index surged 0.7% to 3,067.54 and the SET in Bangkok added 0.3%.

Traders were awaiting a speech by the governor of Japan‘s central bank Monday for hints into whether the Bank of Japan might further adjust its longstanding ultra-lax monetary policy to cope with pressures from inflation.

Last week, markets were jolted by a slight adjustment in the target range for the yield of long-term Japanese government bonds, viewing it as a sign the Bank of Japan might finally unwind its massive support for the economy through ultra-low interest rates and purchases of bonds and other assets.

A widening gap between interest rates in Japan and other countries has pulled the Japanese yen sharply lower against the U.S. dollar and other currencies and accentuated the impact of higher costs for many imported products and commodities.

But the BOJ has kept its key lending rate at minus 0.1%, cautious over risks of recession.

On Friday, the S&P 500 reversed a 0.7% loss to close 0.6% higher, at 3,844.82. With one week left of trading in 2022, the benchmark index is down 19.3% for the year.

The Dow Jones Industrial Average rose 0.5% to 33,203.93, while the tech-heavy Nasdaq edged 0.2% higher, to 10,497.86.

Small company stocks also rose. The Russell 2000 index picked up 0.4% to 1,760.93.

Mixed economic news weighed on stocks early on, but the indexes rebounded by late afternoon amid relatively light trading ahead of the long holiday weekend. U.S. and European markets will be closed Monday.

Markets are in a tricky situation where relatively solid consumer spending and a strong employment market reduce the risk of a recession but also raise the threat of higher interest rates from the Federal Reserve as it presses its campaign to crush inflation.

The government reported Friday that a key measure of inflation is continuing to slow, though it’s still far higher than anyone wants to see. The Federal Reserve monitors the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index.

Also, growth in consumer spending weakened last month by more than expected, but incomes were a bit stronger than expected.

A separate report from the University of Michigan indicating U.S. households are lowering their forecasts for upcoming inflation. That could help avoid a scenario the Federal Reserve has said often it’s desperate to prevent: a vicious cycle where shoppers rush to make purchases in advance of expected price rises, which would only worsen inflation.

The latest round of reports were the last big U.S. economic updates of the year. Investors will soon turn their focus to the next round of corporate earnings.

The Fed has said it will keep raising interest rates to tame inflation, even though the pace of price increases has continued to ease. The Fed’s key overnight rate is at its highest level in 15 years, after beginning the year at a record low of roughly zero. The key lending rate, the federal funds rate, stands at a range of 4.25% to 4.5%, and Fed policymakers have forecast that the rate will reach a range of 5% to 5.25% by the end of 2023.

Given the persistence of high inflation, “many are starting to believe the main story is that there will be no scope for Fed cuts in the year ahead and that central banks will maintain these relatively high rates until underlying inflation is truly cracked — and that process will take time,” Stephen Innes of SPI Asset Management said in a commentary.

The Fed’s forecast doesn’t call for a rate cut before 2024, and the higher rates have raised concerns the economy could stall and slip into a recession in 2023. High rates have also been weighing heavily on prices for stocks and other investments.

In currency dealings, the U.S. dollar slipped to 132.53 Japanese yen from 132.82 yen late Friday. The euro rose to $1.0628 from $1.0614.

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December 25, 2022
Wall Street points modestly higher ahead of inflation report

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Wall Street pointed slightly higher in premarket trading Friday as investors await the government’s final inflation-related report of the year.

Futures for the S&P 500 rose 0.2% and futures for the Dow Jones Industrials were up 0.3%.

On tap Friday is the Commerce Department’s consumer spending report for November, which includes measure of inflation that is closely monitored by the Federal Reserve. The report for October showed that inflation eased somewhat, with prices rising 6% in October from a year earlier. That was the smallest increase since November 2021.

Analysts surveyed by data firm FactSet expect that number to have fallen further, to 5.5% in November. That would be good news for American consumers, who have been squeezed by higher prices for just about everything for the past year-and-a-half.

The Fed is believed to monitor the inflation gauge in the consumer spending report, called the personal consumption expenditures price index, even more closely than it does the government’s better-known consumer price index. But whether a projected half-percentage point decline would move Fed policymakers to soften their stance on future rate hikes remains to be seen.

Last week, the central bank boosted its benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. More surprisingly, the policymakers forecast that their key short-term rate will reach a range of 5% to 5.25% by the end of 2023. That suggests that the Fed is poised to raise its rate by an additional three-quarters of a point and leave it there through next year. That has many economists and investors expecting the U.S. economy to fall into recession in 2023.

Japan reported its core inflation rate, excluding volatile fresh foods, rose to 3.7% in November, the highest level since 1981, as surging costs for oil and other commodities added to upward price pressures in the world’s third-largest economy.

While the rate was much lower than in the U.S. and most major European and emerging economies, it adds to pressure on the Bank of Japan to adjust its own policies that have kept interest rates ultra-low to spur growth. For Japan, deflation — falling prices — rather than inflation has been the key concern for most of the past few decades. Recession in coming months remains the greater concern, economists say.

“Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023,” Capital Economics economist Marcel Thieliant said in a report.

Tokyo’s Nikkei 225 index lost 1% to 26,242.58 and the Hang Seng in Hong Kong shed 0.5% to 19,578.44. The Shanghai Composite index was unchanged, at 3,054.52 and Australia’s S&P/ASX 200 declined 0.7% to 7,099.70.

In Seoul, the Kospi dropped 1.4% to 2,323.09. Shares also fell in Bangkok, Mumbai and Taiwan.

In Europe, London’s FTSE 100 was flat, while Frankfurt’s DAX rose 0.3%. The CAC 40 in Paris dipped 0.1%.

In other trading Friday, U.S. benchmark crude oil rose $1.78 to $79.27 per barrel in electronic trading on the New York Mercantile Exchange. It fell 80 cents to $77.49 per barrel on Thursday.

Brent crude oil, the pricing basis for international trading, advanced $1.61 to $83.28 per barrel.

The U.S. dollar rose to 132.66 Japanese yen from 132.38 yen. The euro strengthened to $1.0622 from $1.0597.

The S&P 500 fell 1.4% on Thursday after having been down as much as 2.9% earlier in the day. It closed at 3,822.39. The pullback brings Wall Street’s main measure of health back to a loss of nearly 20% for the year.

The Dow Jones Industrial Average fell 1% to 33,027.49 and the Nasdaq closed 2.2% lower, at 10,476.12. The Russell 2000 index dropped 1.3% to 1,754.09.

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Kurtenbach reported from Bangkok; Ott reported from Washington.

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December 23, 2022
World shares mixed before updates on spending, durable goods

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BANGKOK — Shares rose in Europe on Friday after a retreat in Asia ahead of updates on U.S. consumer spending and durable goods orders.

Benchmarks climbed in London and Paris but fell in Hong Kong, Tokyo and Seoul. Oil prices surged more than $1 a barrel.

Japan reported its core inflation rate, excluding volatile fresh foods, rose to 3.7% in November, the highest level since 1981, as surging costs for oil and other commodities added to upward price pressures in the world’s third-largest economy.

While price increases are much more modest in Japan than in the U.S. and most major European and emerging economies, they add to pressure on the Bank of Japan to adjust longstanding policies that have kept interest rates ultra-low to spur growth. For Japan, deflation — falling prices — rather than inflation has been the key concern for most of the past few decades. Recession in coming months remains a greater concern, economists say.

“Inflation edged up in November and will peak at around 4% around the turn of the year, but we expect it to fall back below the Bank of Japan’s 2% target by mid-2023,” Capital Economics economist Marcel Thieliant said in a report.

The Fed has already hiked its key overnight rate to its highest level in 15 years. It began the year at a record low of near zero. Many economists and investors expect a recession to hit the U.S. economy in 2023.

Tokyo’s Nikkei 225 index lost 1% to 26,235.25 and the Hang Seng in Hong Kong shed 0.4% to 19,593.06. The Shanghai Composite index dropped 0.3% to 3,045.87 and Australia’s S&P/ASX 200 declined 0.6% to 7,107.70.

In Seoul, the Kospi dropped 1.8% to 2,313.69. Shares also fell in Mumbai and Taiwan but were flat in Bangkok.

Good economic data should be positive for markets when recession may be looming, but the reports Thursday suggested the Federal Reserve may need to keep hiking interest rates and keep them high to curb inflation.

On Friday, the U.S. government will report on personal income and spending and on durable goods orders, among other data.

The Fed is particularly worried about a still-strong job market giving more oxygen to inflation, which has eased a bit in recent months but is still near the highest level in decades. A report Thursday said employers laid off fewer workers last week than expected. Another report showed that the broad U.S. economy expanded at a more robust pace during the summer than earlier estimated.

The S&P 500 fell 1.4% on Thursday after having been down as much as 2.9% earlier in the day. The pullback brings Wall Street’s main measure of health back to a loss of nearly 20% for the year.

The Dow Jones Industrial Average fell 1% and the Nasdaq closed 2.2% lower. The Russell 2000 index dropped 1.3%.

Trading has been topsy-turvy across Wall Street recently as reports paint a mixed portrait of the economy.

High-growth technology stocks have taken some of the year’s worst hits because they’re seen as some of the most vulnerable to rising rates.

Electric vehicle maker Tesla is smarting from rising interest rates and with issues specific to itself and its CEO, Elon Musk. It tumbled 8.9%, bringing its loss for the year to around 64%. It’s taking the rare step of offering discounts on its two top-selling models through year’s end, an indication demand is slowing.

Worries are rising broadly about corporate profits across industries, which are contending with the weight of higher interest rates, still-high inflation and rising costs rise due to payroll and other expenses. Weaker corporate profits could further erode support for stocks, after profits strengthened through much of 2022.

Meanwhile, the housing industry and other areas of the economy whose fortunes are closely tied to low interest rates are suffering.

In other trading Friday, U.S. benchmark crude oil rose $1.50 to $78.99 per barrel in electronic trading on the New York Mercantile Exchange. It fell 80 cents to $77.49 per barrel on Thursday.

Brent crude oil, the pricing basis for international trading, advanced $1.43 to $83.10 per barrel.

The U.S. dollar rose to 132.62 Japanese yen from 132.38 yen. The euro strengthened to $1.0612 from $1.0597.

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December 23, 2022
World shares mostly higher after slight gains on Wall St

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BANGKOK — European shares were higher Wednesday after a mixed session in Asia in the absence of major data releases.

Germany’s DAX rose 0.7% to 13,987.59 while the CAC 40 in Paris jumped 1% to 6,514.30. Britain’s FTSE 100 gained 0.5% to 7,407.92.

The future for the S&P 500 advanced 0.7% while that for the Dow Jones Industrial Average surged 0.8%.

Tokyo’s benchmark Nikkei 225 index slipped 0.7%, to 26,387.72, a day after the Bank of Japan gave in to pressure on the yen by expanding the cap on the yield of the 10-year Japanese government bond to 0.50%. It had been 0.25%.

On Tuesday, the Nikkei 225 lost 2.5%.

The Japanese central bank has kept its key lending rate at minus 0.1% for years, trying to spur growth by keeping credit ultra cheap. The slight softening of its stance against raising interest rates to cut inflation rattled world markets Tuesday, with bond yields pushing higher.

Higher yields make borrowing more expensive, slowing the economy. That can alleviate upward pressure on prices, but it also pulls prices for stocks and other investments lower.

The widening gap between the BOJ’s benchmark rate and rising interest rates in the U.S. and other economies has weakened the yen against the U.S. dollar and other currencies, causing prices for imported oil, consumer goods and industrial inputs to surge and adding to pressures on its economy.

“Ultimately, the BOJ is reacting to a dysfunctioning bond market and a weakening yen. But the move also represents the fall of one of the last central bank hold-outs of ultra-low rate policy,” Stephen Innes of SPI Asset Management said in a commentary.

Central banks around the world have been raising rates at an explosive clip and a growing number of economists and investors see a recession hitting in 2023. Both the Federal Reserve and European Central Bank have pledged to keep raising rates into next year to be sure they get inflation under control.

At the same time, fresh waves of COVID-19 infections in China, Japan and other countries are casting a shadow over pandemic recoveries.

In other Asian trading, Hong Kong’s Hang Seng gained 0.3% to 19,160.49 and the Shanghai Composite index slipped 0.2% to 3,068.41.

South Korea’s Kospi lost 0.2% to 2,328.95. In Sydney, the S&P/ASX 200 gained 1.3% to 7,115.10. Shares rose in Bangkok and Taiwan but fell in Mumbai.

On Tuesday, the S&P 500 rose 0.1% while the Dow industrials climbed 0.3%. The Nasdaq composite barely budged, closing less than 0.1% higher. Small company stocks outdid the broader market, lifting the Russell 2000 index 0.5%.

The yield on the 10-year Treasury rose to 3.70% from 3.59% late Monday. That yield helps set rates for mortgages and other economy-setting loans, which has already meant particular pain for the U.S. housing market.

The two-year U.S. Treasury yield, which tends to more closely track expectations for action from the Federal Reserve, was more reserved. It held steady at 4.26%.

In the foreign exchange market, the dollar rose to 131.70 Japanese yen from 131.62 yen. Tokyo’s surprise move on Tuesday had pulled the dollar 4% lower against the yen.

The euro fell to $1.0615 from $1.0626.

U.S. benchmark crude oil gained 77 cents to $77.00 per barrel in electronic trading on the New York Mercantile Exchange. It gained 1.2% on Tuesday.

Brent crude, the pricing basis for international trading, picked up 85 cents to $80.84 per barrel.

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December 21, 2022
Asian shares track Wall St gains on cooler inflation data

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BANGKOK — Stocks were mostly higher Wednesday in Asia after a rally on Wall Street spurred by news that inflation in the U.S. cooled more than expected last month.

The 7.1% consumer price index reading for November raised hopes Tuesday for easing pressure on the economy ahead of an interest rate policy update from the U.S. Federal Reserve.

The Fed is widely expected to raise its benchmark rate a half-point Wednesday, smaller than the past four hikes of three-quarters of a point.

Also Wednesday, the Bank of Japan’s quarterly “tankan” survey showed a deterioration in business conditions for major Japanese manufacturers, reflecting higher costs for industrial inputs and energy and weaker demand as the Fed and other central banks raise interest rates to tame inflation.

The headline index for large manufacturers was 7, down from 8 in the previous quarter and the fourth straight quarter of declines. The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

Conditions for nonmanufacturers, such as service industries, rose to 19 from 14, as Japan lifted pandemic precautions and reopened to foreign tourists.

“Today’s Tankan survey suggests that while the services sector is going from strength to strength, the outlook for the manufacturing sector continues to worsen,” Darren Tay of Capital Economics said in a commentary. He noted that capital spending projections also weakened slightly.

Tokyo’s Nikkei 225 advanced 0.7% to 28,156.21 and the Hang Seng in Hong Kong added 0.6% to 19,722.16. South Korea’s Kospi was up 1.1% to 2,399.25.

The Shanghai Composite index edged 0.1% lower to 3,172.33.

In Australia, the S&P/ASX 200 gained 0.7% to 7,251.30. India’s Sensex gained 0.7% while the SET in Bangkok added 0.6%.

On Tuesday, the S&P 500 rose 0.7% to 4,019.65 and the Nasdaq composite gained 1% to 11,256.81. The Dow Jones Industrial Average picked up 0.3% to 34,108.64.

Small company stocks also gained ground. The Russell 2000 index rose 0.8% to 1,832.36.

Stocks pared back gains as analysts cautioned investors not to get carried away by hopes for an easier Fed, as they have in the past.

The detail of the inflation data “under the hood being less encouraging than it is on the surface,” Mizuho Bank economists said in a report. They noted that core services prices were up 0.4% from a month earlier, distorting inflation risks.

“To be precise , the headline understates underlying inflation risks that concern the Fed,” the report said.

Tuesday’s report offered hope that the worst of inflation really did pass during the summer, though inflation remains painfully high and shoppers are paying prices well above levels from a year earlier.

A Fed rate hike of 0.50 percentage points would usually be a big deal because it’s double the typical move. But with inflation coming off its worst level in generations, it would be a step down from the four hikes of 0.75 percentage points the Fed has approved since the summer.

Some of Wall Street’s wildest action Tuesday was in the bond market, where yields fell sharply immediately after the inflation report’s release.

The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.48% from 3.62% late Monday. The two-year yield, which more closely tracks expectations for the Fed, dropped to 4.22% from 4.39%.

Other central banks around the world, including the European Central Bank, are also likely to raise their own rates by half a percentage point this week.

Even if inflation is finally abating, the global economy still is threatened by rate increases already pushed through. The housing industry and other businesses that rely on low interest rates have shown particular weakness, and worries are rising about the strength of corporate profits broadly.

In other trading, U.S. benchmark crude lost 30 cents to $75.09 per barrel in electronic trading on the New York Mercantile Exchange. It jumped $2.22 on Tuesday to $75.39 per barrel.

Brent crude, the pricing basis for international trading, shed 34 cents to $80.34 per barrel.

The dollar slipped to 135.43 Japanese yen from 135.59 yen. The euro rose to $1.0638 from $1.0633.

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December 13, 2022
Japan’s economy shrank less in July-Sept, revised data show

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TOKYO (AP) — Japan’s economy contracted less than previously thought in the last quarter, weathering the country’s latest big COVID wave with less damage than had been thought.

The Cabinet Office reported Thursday that the economy shrank at a 0.8% annual rate in July-September. That was better than minus 1.2% annual growth reported earlier.

In quarterly terms, the world’s third-largest economy contracted 0.2% instead of 0.3%.

Pandemic precautions eased in the late summer, allowing normal business activity and travel to resume after many months of on-again, off-again limits. Exports also were stronger than earlier thought, expanding 2.1% in annual terms, up from the earlier estimate of 1.9%.

Growth in the last fiscal year, which ended in March, also was revised upward to an annual 2.5% pace from 2.3%. The new data also showed corporate investment rose more than reported earlier.

The economy has picked up steam in the current quarter, as border controls were eased to allow foreign tourists to enter the country. But subdued demand from China and slowing growth in other major markets as central banks raise interest rates to counter inflation are expected to limit the pace of recovery.

Decades-high inflation poses another threat, undermining purchasing power and raising costs for both businesses and consumers in a country that depends heavily on imports. With the economy still in the doldrums, the Bank of Japan has shied away from the interest rate hikes being used to slow growth and relieve price pressures in the U.S. and elsewhere. That has weakened the Japanese yen versus the U.S. dollars, compounding the impact of higher costs for oil, gas and other commodities.

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December 7, 2022
Asian shares mostly lower as Japan preps massive stimulus

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Shares were mostly lower in Asia on Friday after a mixed session on Wall Street, where tech sector losses offset gains in other parts of the market.

Tokyo’s benchmark slipped as the government was preparing about $490 billion in stimulus spending to help the world’s No. 3 economy cope with inflation. As expected, the Bank of Japan wrapped up a policy meeting by keeping its ultra-lax monetary policy unchanged even as it forecast higher inflation.

The Nikkei 225 index lost 0.5% to 27,210.03 while the Hang Seng in Hong Kong sank 2.3% to 15,069.69. The Shanghai Composite index shed 0.8% to 2,958.25.

The Kospi in Seoul declined 0.4% to 2,278.64. Australia’s S&P/ASX 200 dropped 0.8% to 6,788.00.

The economic stimulus package due for approval Friday includes government funding of about 29 trillion yen ($200 billion) in subsidies and other measures to help soften the burden of costs from rising utility rates and food prices. It is also designed to help shore up support for Prime Minister Fumio Kishida, whose popularity has taken a beating due to a scandal over ties between the ruling Liberal Democratic Party and the South Korea-based Unification church.

Thursday on Wall Street, the S&P 500 fell 0.6%, with about 44% of stocks within the benchmark index losing ground. It closed at 3,807.30.

The tech-heavy Nasdaq fell 1.6% to 10,792.67, while the Dow Jones Industrial Average rose 0.6% to 32,033.28.

Smaller company stocks held up better than the broader market. The Russell 2000 index added 0.1% to 1,806.32.

Facebook’s parent company, Meta Platforms, plummeted 24.6% for the biggest drop in the S&P 500 after reporting a second straight quarter of revenue decline amid falling advertising sales and stiff competition from TikTok. It joined other tech and communications stocks, such as Google’s parent company, Alphabet, and Microsoft, in reporting weak results and worrisome forecasts over advertising demand. Alphabet fell 2.9% and Microsoft slid 2%.

Amazon slid 19% in after-hours trading after the retail giant issued an estimate for sales in the last quarter of the year came in well below analysts’ forecasts. The stock fell 4.1% in regular trading before the release of its latest quarterly results.

Construction equipment maker Caterpillar jumped 7.7% after it handily beat analysts’ third-quarter profit forecasts. The big gain helped boost the 30-company Dow.

Another pullback in long-term Treasury yields helped support stocks in companies that weren’t reporting quarterly results. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.91% from 4.01% late Wednesday. The two-year yield fell to 4.30% from 4.42%.

Excluding the Nasdaq, the major indexes are on pace for weekly gains. And the S&P 500 remains solidly on track to end October in the green.

Markets got some encouraging economic news Thursday as the government reported the U.S. economy returned to growth last quarter, expanding 2.6%. That marks a turnaround after the economy contracted during the first half of the year.

The economy has been under pressure from stubbornly hot inflation and the Federal Reserve’s efforts to raise interest rates in order to cool prices. The central bank is trying to slow economic growth through rate increases, but the strategy risks going too far and brining on a recession.

The rising interest rates have made borrowing more difficult, particularly with mortgage rates. Average long-term U.S. mortgage rates topped 7% for the first time in more than two decades this week.

Central banks around the world also have been raising interest rates in an effort to tame inflation. The European Central Bank piled on another outsized interest rate hike on Thursday. Markets in Europe were mixed.

Wall Street has more earnings to review Friday, including Exxon Mobil, Chevron and Charter Communications.

Meanwhile, S&P Dow Jones Indices said Thursday that insurer Arch Capital Group will replace Twitter in the S&P 500 index before the opening of trading on Tuesday. The move comes ahead of Elon Musk’s acquisition of Twitter in a transaction expected to close Friday.

In other trading, the dollar fell to 146.20 yen from 136.31 late Thursday. The euro

___

AP Business Writers Damian J. Troise and Alex Veiga contributed.

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October 27, 2022
Business sentiments cool as cheap yen, costs weigh on Japan

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TOKYO — Business sentiment among large manufacturers worsened for the third straight quarter, a Bank of Japan survey showed Monday, as the nation grappled with rising costs, the dropping value of the yen and restrictions on economic activity over the coronavirus pandemic.

The headline measure for the “tankan,” measuring sentiment among large manufacturers, was plus 8, down from plus 9 the previous quarter.

The tankan measures corporate sentiment by subtracting the number of companies saying business conditions are negative from those responding they are positive.

Worries are growing about how the Bank of Japan hasn’t gone along with other central banks in tightening interest rates to curb growing inflation. Japan has been trying to fight deflation in recent years and has kept interest rates at near zero.

The nose-diving yen is also a concern, although a cheap yen has in the past been lauded as helping the nation’s big exporters like Toyota Motor Corp., by raising the value of overseas earnings.

The rising costs of imports, including energy as well as food, is hurting Japan, when the U.S. dollar is now trading at nearly 145 yen, when it used to be at 130-yen levels just a few months ago. A year ago, the dollar cost 111 yen.

Sentiment among large nonmanufacturers improved to 14 from 13, according to the latest tankan.

The world’s third-largest economy has struggled for decades to keep growth going. But the stagnation has worsened the last two years because of reduced travel and supply shortages caused by the pandemic.

The war in Ukraine has added to the problems for a resource-poor nation that imports almost all its oil.

The return of individual visa-free travel later this month is certain to work to boost incoming tourists.

The pandemic had squelched overseas tourism, which had sustained economic activity in recent years.

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Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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October 2, 2022