Stock markets today: Stocks drift ahead of week’s deluge of profit, economic data
NEW YORK –
U.S. inventory indexes are drifting Monday, as Wall Street stays hesitant to make massive strikes amid questions on the place the financial system, rates of interest and company earnings are heading.
The S&P 500 was 0.1% decrease in noon buying and selling after barely budging final week. The Dow Jones Industrial Average was up 14 factors, or lower than 0.1%, at 33,823, as of 11 a.m. Eastern, whereas the Nasdaq composite was 0.4% decrease.
Coca-Cola was rising 0.6% after reporting stronger revenue and income for the primary three months of the yr. It was the one firm within the S&P 500 to report Monday morning, however greater than 170 others are scheduled to comply with it this week.
The query is whether or not they can prime the low bar that Wall Street has set for them, and what CEOs for these corporations say about prospects for earnings later this yr. Analysts anticipate S&P 500 corporations to report a roughly 6% drop in earnings per share from a yr earlier, which might be their worst exhibiting for the reason that spring of 2020 when the pandemic paralyzed the financial system.
Some of Wall Street’s most influential corporations are set to report this week, together with Microsoft on Tuesday and Amazon on Thursday. The majority of corporations have been topping earnings forecasts to date this reporting season, as is often the case.
Expectations are broadly low as a result of inflation stays excessive and rates of interest are a lot larger than a yr earlier, which has harm swaths of the financial system.
The Federal Reserve has jacked up rates of interest at a livid tempo in hopes of undercutting excessive inflation. High charges can try this however solely by bluntly slowing your entire financial system. That ups the probabilities for a recession, whereas additionally hurting costs for investments.
Besides this week’s blizzard of earnings stories, Wall Street can also be ready for the primary estimate of how shortly the U.S. financial system grew within the first three months of the yr, amongst different knowledge. Economists predict it should present a slowdown to progress of 1.9% at an annual charge, down from 2.6% within the fourth quarter.
Higher rates of interest have already slowed the housing market by making mortgages dearer. Manufacturing and different areas of the financial system have additionally proven ache, whereas the job market has remained remarkably resilient.
The report on the U.S. financial system shall be one of many closing items of knowledge earlier than the Federal Reserve’s subsequent assembly, scheduled for subsequent week. Much of Wall Street expects it to boost rates of interest a minimum of yet one more time, earlier than doubtless taking a pause.
It has been elevating charges at each one in every of its conferences for greater than a yr, typically by double or triple the everyday quantity. Its in a single day charge now sits in a spread of 4.75% to five%, up from nearly zero at the beginning of final yr.
Many merchants are betting the Fed should lower rates of interest later this yr as a way to prop up the financial system. But the Fed has to date been insistent that it’s going to maintain charges excessive a minimum of via the top of this yr. Inflation stays too excessive for its liking, even when it has come down from its peak final summer season.
“The Fed seems determined to fight inflation even if a more significant slowdown arrives,” Morgan Stanley strategists led by Michael Wilson wrote in a report.
High charges have already triggered cracks within the banking system, with the second- and third-largest US. financial institution failures in historical past rocking markets final month. The worst of the disaster appears to have handed, however scrutiny stays harsh on smaller and mid-sized banks that appear to be underneath probably the most menace of seeing clients yank their deposits.
First Republic Bank, which has been on the middle of the highlight, will report its newest quarterly outcomes after buying and selling closes Monday. Its inventory jumped 11.1% earlier than the report, making it one of many greatest gainers within the S&P 500.
The banking trade’s struggles had been world, as larger rates of interest worldwide pushed traders to hunt for potential weak hyperlinks. Credit Suisse, an enormous funding financial institution, mentioned Monday that it noticed greater than 61 billion Swiss francs (practically $69 billion) in outflows throughout the first three months of the yr. It’s within the strategy of getting swallowed by rival UBS after regulators organized for its takeover.
France and Germany additionally report financial progress this week.
“There is no doubt that the global economy is weakening and vulnerable to further slowing,” Clifford Bennett of ACY Securities mentioned in a report.
Stock indexes throughout Europe had been blended, whereas markets in Asia additionally made solely modest strikes. Japan’s Nikkei 225 added 0.1%, whereas Hong Kong’s Hang Seng slipped 0.6%.
On Wall Street, one of many greatest losers was Bed Bath & Beyond, which dropped 23% to 23 cents after submitting for chapter safety.
The inventory of the struggling retailer went on a wild journey in recent times as traders guess on whether or not it might efficiently flip round its operations, typically surging or plunging by 20% or extra in a single day. The arrival and departure of an influential investor who performed a key position within the GameStop “meme-stock” craze helped drive a number of the greatest swings.
In the bond market, the yield on the 10-year Treasury fell to three.51% from 3.57% late Friday.
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AP Business Writer Joe McDonald contributed
