NEW YORK (AP) — U.S. stocks are lower Thursday, although they’ve made up most of a steep early loss. Banks are falling along with interest rates while insurer AIG takes a big loss after its first-quarter report. Prescription drug distributor Cardinal Health is tumbling and taking the health care sector lower. Tesla is skidding after the electric car maker posted another big loss, and Wall Street reacted negatively to comments by CEO Elon Musk.
KEEPING SCORE: The S&P 500 index dropped 11 points, or 0.4 percent, to 2,624 as of 1:30 p.m. Eastern time. The Dow Jones industrial average fell 26 points, or 0.3 percent, to 23,860. In the morning it lost as much as 393 points.
The Nasdaq composite shed 23 points, or 0.3 percent, to 7,077. The Russell 2000 index of smaller-company stocks slid 8 points, or 0.6 percent, to 1,546.
Stocks slumped late Wednesday after the Federal Reserve left interest rates unchanged. The Fed expects to keep raising interest rates to keep inflation under control, and investors appeared to get more concerned about the possibility that rising rates will slow the economy down.
FINANCIALS FLATTENED: American International Group dropped 6 percent to $51.54 after its first-quarter profit fell short of analysts’ estimates.
Meanwhile banks fell in tandem with interest rates as bond prices climbed. The yield on the 10-year Treasury note fell to 2.94 percent from 2.97 percent. Lower bond yields mean banks can’t make as much money from lending. JPMorgan Chase slid 1 percent to $106.78 and Bank of America declined 1.98 percent to $29.05.
HEALTH STOCKS QUEASY: Cardinal Health, which distributes prescription drugs, also had a smaller-than-expected profit and slashed its forecast for the rest of the year. Cardinal said its Cordis cardiovascular products business ran into supply chain problems and also paid a higher expected tax rate. The stock gave up 18.4 percent to $52.73.
Medical device maker Hologic dropped 9.4 percent to $35.92 after it wrote down the value of its Cynosure business by about $732 million. It bought Cynosure for $1.57 billion a year ago. Health care information technology company Cerner reported weak revenue and gave a disappointing quarterly forecast. It fell 5.3 percent to $55.45.
NOT EARNING IT: About three-fourths of S&P 500 companies have reported results, according to CFRA Research, and their profits and revenues are consistently blown past Wall Street’s expectations. But the market isn’t acting like it: since April 12, the day before big banks started reporting their results, the S&P 500 is down 1.5 percent.
“Investors looked for any and all reasons to sell the results,” wrote Lindsey Bell, investment strategist for CFRA Research. In a note to clients, Bell said that Caterpillar “crushed all hopes” that stocks would rise following earnings. The construction equipment maker said it doesn’t expect to top its first-quarter profit for the rest of the year.
HITTING THE SKIDS: Tesla tumbled 6.7 percent to $281.03 after the electric car maker said it lost $745 million in the first quarter as it is still struggling to produce more of its lower-cost Model 3 sedan. The company has $9.5 billion in long-term debt and some experts are wondering if Tesla will be able to pay all of its bills because of the repeated losses. The company said it plans to defer some spending.
Musk appeared to make matters worse on the company’s conference call, as he was testy with analysts at times and dismissed questions about the company’s cash needs as “boring, boneheaded” and “not cool.” After being asked about reservations for the Model 3, he said the subject matters was “killing me.” JPMorgan Chase analyst Ryan Brinkman said the call was “truly bizarre.”
EAT UP: Kraft Heinz posted a bigger profit than analysts expected despite weaker sales, and the Oreo maker’s stock gained 2.3 percent to $55.42. Cereal and Pop Tart maker Kellogg rose 1.8 percent to $57.67 after its profit and sales topped analyst projections.
LOSING THE BEAT: Spotify sank after reporting quarterly results for the first time since becoming a publicly traded company in early April. The music streaming service had 75 million subscribers at the end of March, but investors may have hoped for stronger growth, as Spotify said it expects to have 79 million to 83 million subscribers by the end of June. Spotify fell 7.6 percent to $157.07, giving up most of the gains it’s made since its debut.
ENERGY: Benchmark U.S. crude recovered from an early loss and rose 0.7 percent to $68.40 barrel in New York. Brent crude, the international standard, rose 0.3 percent to $73.60 a barrel in London.
CURRENCIES: The dollar fell to 109.18 yen from 109.73 yen. The euro sipped to $1.1975 from $1.1988.
OVERSEAS: Germany’s DAX fell 0.9 percent and France’s CAC 40 shed 0.5 percent. The British FTSE 100 dipped 0.5 percent. Hong Kong’s benchmark Hang Seng index dropped 1.2 percent and South Korea’s Kospi dipped 0.7 percent. Japanese markets were closed for a holiday.
AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP . His work can be found at https://apnews.com/search/marley%20jay