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NEW YORK — Wall Street closed its 10th winning week in the last 11 with a mixed finish Friday following an encouraging report on inflation.
The S&P 500 edged up by 0.1% after earnings reporting season kicked off with mixed results from Delta Air Lines, JPMorgan Chase and others. The Dow Jones Industrial Average fell 118 points, or 0.3%, dragged down by a sharp loss for UnitedHealth Group following its results. The Nasdaq was basically flat and rose by less than 0.1%.
Stocks have been roaring toward records for months, pulling the S&P 500 within 0.3% of its all-time high, on hopes that inflation is cooling enough for the Federal Reserve to cut interest rates this year.
Treasury yields fell after a report showed inflation at the U.S. wholesale level was weaker last month than economists expected.
The yield on the 10-year Treasury eased to 3.94% from nearly 4% just before the report’s release. The two-year Treasury yield fell to 4.17% from 4.27% before the wholesale inflation report’s release.
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Interest rates are one of the main levers that set where stock prices are. The other is companies’ profits, and analysts expect the S&P 500 to deliver a second straight quarter of growth.
The reporting season for the end of 2023 unofficially started Friday with a bevy of reports from banks.
JPMorgan Chase dipped 0.7% after reporting weaker results for the last three months of 2023 than expected.
UnitedHealth Group fell 3.4% despite topping analysts’ profit forecasts. Medical costs for the health care giant soared, worrying investors.
Delta Air Lines sank 9% even though it reported stronger profit and revenue than analysts forecast.
The airline and other travel-related companies also were hurt by a rise in oil prices, which put pressure on their fuel costs. United Airlines fell 10.6%, and Norwegian Cruise Line Holdings lost 4.3%.
Crude prices climbed on worries about potential disruptions to supplies after Yemen’s Houthi rebels vowed fierce retaliation for U.S. and U.K. strikes against them. A barrel of benchmark U.S. crude oil rose 66 cents to $72.68. Brent crude, the international standard, rose 88 cents to $78.29 per barre.
That helped stocks of energy companies to lead the S&P 500 with an overall gain of 1.3%. Valero Energy rose 2.8%, and Marathon Oil climbed 2%.
All told, the S&P 500 rose 3.59 points to 4,783.83. The Dow fell 118.04 points to 37,592.98, and the Nasdaq composite gained 2.57 points to 14,972.76.
Abroad, Japan’s Nikkei 225 jumped 1.5% to cap a strong week that brought it to levels unseen since 1990. Indexes were lower in much of the rest of Asia but higher in Europe.
What’s at risk when you take out a small business loan
What’s at risk when you take out a small business loan
If you’re running a small business, you’ll likely need to raise some capital at some point. There are many options for doing so—including borrowing from family or friends, taking out a small business loan from the bank, or relying on your credit cards. But no matter how you scrape together funds, it’s essential to consider how you will pay them back.
Westfield used industry sources and news coverage to compile a list of potential risks in borrowing money to fund a small business. According to a small business report by the Federal Reserve, nearly 3 in 4 firms with paid employees had outstanding debt in 2022. Among businesses with debt, 40% have borrowed $100,000 or more. Companies will have to pay those loans back over time, potentially burdening their business’s revenue.
Those who want to avoid loans or credit card debt may seek investors and offer equity in their business. However, this strategy has its own risks. The more ownership you offer to outside investors, the less control you have over your business strategies.
No matter what type of business funding you decide to pursue, make sure you understand the long-term consequences and risks that come along with it.
Defaulting on a loan
A traditional loan from the bank might seem like the most obvious solution when you’re looking to raise money for your small business. There are a few options here, including a traditional business loan from your banking institution or one backed by the Small Business Administration. SBA loans are typically a bit easier to get approved, as they are backed by the government and pose less risk for lenders.
No matter which loan you take out, defaulting or failing to make payments will have severe consequences. You will lose any collateral you’ve put up, and your business and personal credit scores can take a hit. Most SBA loans require a personal guarantee, meaning your lender can seize your personal assets if you can’t cover the cost.
It’s critical to have a repayment plan before borrowing money and to take only what you need.
Interest increases
An alternative to a small business loan is to pay for business expenses using a personal or business credit card. A credit card can ensure you can pay vendors on time when your cash flow is irregular, as you can pay off your bill later or over time.
That said, credit cards are not a reliable source of significant funds. Most credit cards have very high interest rates that can get out of control if you can’t pay back your debts. The current average business card APR is 22.70%, and because credit card APRs are almost always tied to the prime rate, you could be subject to increases and fluctuations over time.
Not to mention, credit cards don’t come with a set payoff schedule like a loan. You’ll have to be disciplined with monthly payments to avoid burdening yourself with debt for an extended period.
Shifting control
If you’re worried about the implications of borrowing money from a bank or credit card company, you could consider seeking angel or venture capital investing to fund your business. In this case, you’d offer equity in the business in exchange for securing the funds you need to keep it running.
The risk in this method comes if you transfer too much control into the hands of investors. The more equity you trade away, the less control you have over your business. Think carefully about how much sway you are willing to part with and how much you trust the input of the investors you bring on, especially if you offer a majority share.
Relationship fallouts
Finally, borrowing money from friends or family could be an alternative if you either don’t qualify for funding from the bank or worry about paying it back. You could also score a deal on repayment terms and interest with the right lender.
Still, this is very dangerous to personal relationships. A 2022 CreditCards.com survey found that among respondents who lent friends and family money, 59% had a bad experience, including not getting their money back or damaging their relationship. If the relationship is important, consider how borrowing money might change it.
This story originally appeared on Westfield and was produced and distributed in partnership with Stacker Studio.
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