NEW YORK, July 11 (Reuters) – US stocks lost ground on Monday as a lack of catalysts led market participants to cautiously approach a week after the end of crucial inflation data and the unofficial start of the second-quarter earnings season get in.
Market-leading growth stocks dragged all three major US stock indices into negative territory, with risk aversion exacerbated by Macau’s first casino shutdown in over two years to stem the spread of COVID-19. Continue reading
“It’s a nervous market,” said Rob Haworth, chief investment strategist at US Bank Wealth Management in Seattle. “It’s all about the start of the earnings season and what inflation (data) is telling us.”
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“We know that inflation is being driven by supply constraints and China is a major factor,” Haworth added. “And (the Macau shutdown) threw a cold blanket on the market this morning.”
Earnings from major banks including JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co are expected to be released later this week for the second-quarter earnings season.
The S&P 500 Banking Index (.SPXBK) slipped 1.0%.
Analysts are expecting a steep slump in year-on-year earnings as companies increase their provision for loan losses, raising fears of an imminent recession. Continue reading
Later in the week, a raft of economic data – including consumer prices, retail sales and factory production – should provide a glimpse of the extent to which inflation has peaked and the economy has cooled as the Federal Reserve moves closer to next week’s monetary policy meeting. expected to culminate in the second straight rate hike of 75 basis points.
“The market is trying to warn itself about this CPI pressure,” Haworth said. “We’re hopeful for a slowdown that would put the Federal Reserve on a softer stance, but then again, there’s a lot of reason to think inflation could stay high and the Fed will stay aggressive.”
The market is currently expecting the central bank to hike the futures rate for fed funds by 75 basis points in its latest salvo against blistering inflation, a tactic some fear could push an already cooling economy into recession.
The Dow Jones Industrial Average (.DJI) fell 164.31 points, or 0.52%, to 31,173.84, the S&P 500 (.SPX) lost 44.95 points, or 1.15%, to 3,854.43 and the Nasdaq Composite (.IXIC) fell 262.71 points, or 2.26%, to 11,372.60.
Of the 11 major sectors in the S&P 500, communications services (.SPLRCL) suffered the largest percentage decline while utilities (.SPLRCU) led the gainers.
Before the big banks kick off their second-quarter earnings season in earnest on Thursday and Friday, earnings from PepsiCo and Delta Air Line (DAL.N) are expected on Tuesday and Wednesday, respectively.
According to Refinitiv, analysts on Friday saw S&P aggregate earnings growth of 5.7% for the period April through June, down from the 6.8% forecast earlier in the quarter.
Twitter Inc (TWTR.N) plunged 11.3% after Elon Musk said he would end his deal to buy the social media company. Continue reading
Shares in US casino operators Las Vegas Sands (LVS.N), Wynn Resorts (WYNN.O) and Melco Resorts fell between 6.3% and 9.6% after Macau closed all casinos to avoid the worst of the COVID outbreak since the beginning of the health crisis. Continue reading
The broader S&P 1500 Hotel, Restaurant and Leisure Index (.SPCOMHRL) fell 1.5%.
Declining issues predominated on the NYSE at a 2.41 to 1 ratio; on the Nasdaq, a 2.81 to 1 ratio favored decliners.
The S&P 500 posted two new 52-week highs and 30 new lows; the Nasdaq Composite posted 20 new highs and 130 new lows.
Volume on US exchanges was 9.33 billion shares, compared to the average of 12.92 billion over the past 20 trading days.
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Reporting by Stephen Culp; additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy
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