By Stan Choe

Stocks closed lower following another mixed batch of profit reports from companies, as rising yields in the bond market raise the pressure on Wall Street. The S&P 500 fell 0.9% Thursday after erasing a gain of about the same size from the morning. The Dow lost 0.7% and the Nasdaq gave up 1%. Stocks have been shaky this week, flipping from gains to losses and back again amid uncertainty about where interest rates and inflation are heading. Treasury yields rose, and the two-year yield hit its highest level since November. More companies announced layoffs, but the overall number across the economy remains relatively low.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — Stocks are falling Thursday following another mixed batch of profit reports from companies, as rising yields in the bond market up the pressure on Wall Street.

The S&P 500 was 0.8% lower in afternoon trading after erasing an even bigger gain from the morning. The Dow Jones Industrial Average was down 253 points, or 0.7%, at 33,695, as of 3:17 p.m. Eastern time, while the Nasdaq composite was 0.9% lower.

Stocks have been shaky this week, flipping from gains to losses and back again amid uncertainty about where interest rates and inflation are heading. A still-strong jobs market has investors buying more into the Federal Reserve’s forecast that it will hike rates a couple more times before holding them at a high level through this year. High rates can drive down inflation but also raise the risk of a recession and hurt investment prices.

A narrowing disconnect between markets and the Fed could lead to less volatility in markets in the future, said Thomas Martin, senior portfolio manager at Globalt Investments. But for now, with a jumble of earnings reports pouring in from companies along Wall Street and questions remaining about whether the economy can avoid a sharp recession, swings are likely to remain.

“There's continuing evidence that the economy is stronger than people thought it was going to be,” Martin said. “The question is what is the economy’s ability to continue that resilience in the face of interest rates that are a lot higher than they were a year ago."

In the bond market, at least, a warning signal is continuing to flash red with yields on longer-term Treasurys well below shorter-term Treasurys. It's an unusual occurrence that has often preceded recessions in the past.

The two-year Treasury yield, which tends to move with expectations for Fed action, climbed to 4.50% from 4.43% late Wednesday. It's at its highest level since mid-November, according to Tradeweb. The 10-year Treasury, which helps set rates for mortgages and other loans, rose to 3.67% from 3.62%.

“We’re still somewhere in that 40% to 60% area of a recession,” Martin said. “I’m not trying to be wishy-washy about it, but there are so many ways to go. The level of uncertainty has been high and remains high.”

High inflation and worries about a slowing economy have already begun to hit corporate earnings, and big U.S. companies have been reporting relatively lackluster results for the end of 2022.

The Walt Disney Co. surprised the market when it reported stronger profit for the latest quarter than analysts expected. It also said it will cut about 7,000 jobs as part of a plan to reduce its costs by $5.5 billion.

Its shares fell 1.5% after being up as much as 5.7% earlier in the morning. It gave up its gains after an activist investor, Nelson Peltz, called off a proxy fight with Disney after saying his firm got what it wanted with the changes it announced.

The media giant joins the growing list of high-profile companies to announce layoffs amid an uncertain economy. The bulk began in the technology industry, where companies acknowledged misreading the boom coming out of the pandemic and hiring too many people. But job cuts have since spread out to other industries.

“Things have gotten good on the inflation front, but now I think the next cause of volatility is beginning to shift to recession fears,” said Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company.

Overall, though, the job market has remained resilient. Last week, 196,000 U.S. workers filed for unemployment benefits. That was slightly more than the prior week, but it remained below the 200,000 level for a fourth straight week.

While a strong job market is good for workers and for sales of companies selling to them, the Federal Reserve also worries that it could lead to upward pressure on inflation. If employers have to give big raises to keep and attract workers, the worry is that could force them to raise prices for their own products and services.

Shares of casino operators were strong Thursday after earnings reports raised optimism about momentum in both Las Vegas and Macau in Asia. MGM Resorts International climbed 6.4%, while Wynn Resorts rose 4.3%.

On the losing end was Baxter International, which dropped 12.4% after the health care company reported weaker quarterly profit than forecast. It also gave a forecast for earnings this upcoming year that fell below Wall Street’s expectations. Baxter also announced layoffs to cut costs, saying it would reduce its global workforce by less than 5%.

Mattel tumbled 11.2% after the toymaker reported a big decline in sales and weaker profit than expected for the all-important holiday quarter.

Another drop for Google's parent company, Alphabet, also weighed heavily on the market. It fell 5.1%, continuing its rough week amid worries about competition from Microsoft, which unveiled a new Bing search engine powered by artificial intelligence.

AP Business Writers Damian J. Troise, Elaine Kurtenbach and Matt Ott contributed.

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