By Liz Moyer
Investing.com -- U.S. stocks reversed earlier gains on Thursday and were turning lower despite strong earnings reports that overcame fears about more interest rate increases.
At 13:29 ET (18:29 GMT), the Dow Jones Industrial Average was down 63 points or 0.2%, while the S&P 500 was down 0.1% and the NASDAQ Composite was flat.
Walt Disney Company (NYSE:DIS) beat expectations and announced a reorganization that will result in 7,000 job cuts as it focuses on lowering costs. Newly returned CEO Bob Iger has put an emphasis on improving the company’s streaming business. Disney shares rose 2.5%.
PepsiCo, Inc. (NASDAQ:PEP) and AbbVie, Inc. (NYSE:ABBV) also beat expectations for the recent quarter.
Jobless claims came in slightly higher than expected. Initial claims for last week were 196,000, higher than the 190,000 expected and up from the prior week. But new claims still remain under 200,000, which is an indication of a still-tight labor market.
Last week’s unexpectedly strong jobs report for January stoked some fear that the Federal Reserve would be forced to continue to raise rates. Fed officials said this week that the central bank’s mission to cool inflation isn’t yet done, and could take longer than some expect. But investors have been hoping for a sign that its interest rate hikes are about to reach a pause, and eventually a reversal.
Futures market traders are betting the Fed will lift rates to just over 5% by July. Most foresee another quarter percentage point rate hike in March.
Next week brings the newest data on the consumer price index and retail sales, which the Fed will be watching to help guide its policy.
Later today, PayPal Holdings, Inc. (NASDAQ:PYPL) reports earnings. Analysts expect earnings per share of $1.20 on revenue of $7.4 billion. The report would come a day after buy now pay later rival Affirm Holdings, Inc. (NASDAQ:AFRM) missed expectations and announced it would cut 19% of its workforce, acknowledging it didn’t shift quickly enough when economic conditions changed in the past year.