By DAMIAN J. TROISE, AP Business Writer
NEW YORK (AP) — Stocks faltered in afternoon trading on Wall Street on Tuesday as traders brace for a big week of inflation news and corporate earnings reports.
The S&P 500 was up 0.1% at 12:01 a.m. EST. The Dow Jones Industrial Average rose 84 points, or 0.3%, to 31,260 and the Nasdaq rose 0.1%.
Oil prices fell 7.3% and weighed on energy stocks, which also dampened gains elsewhere in the market. Hess fell 4.3%.
Banks and industrial enterprises are gaining ground. Bank of America rose 1.7% and General Electric 3.4%.
Major companies are starting to publish their latest quarterly results. Soft drink and snack maker PepsiCo remained virtually unchanged after releasing an earnings report that easily topped analysts’ estimates.
Several big tech companies tumbled and dampened gains elsewhere in the market. High tech stock values tend to push the broader market up or down. Microsoft fell 2.8%.
Clothing company Gap fell 3.9% after announcing CEO Sonia Syngal was stepping down after two years on the job.
Investors brace for more big business revenue this week as they try to gauge how much damage pervasive inflation is inflicting on consumers and businesses. Expectations for the second quarter results seem subdued. Analysts predict growth of 5.1% for S&P 500 companies, which would be the weakest since the end of 2020, according to FactSet.
“We’ll have more color in the next couple of weeks on how the economy is shaping, through a corporate lens,” Terry Sandven, chief equity strategist at US Bank Wealth Management.
Delta Air Lines will release its latest results on Wednesday and provide more information on the travel industry’s recovery from the pandemic. Big banks, including JPMorgan Chase and Citigroup, are on tap later this week.
The main concerns on Wall Street remain inflation and whether aggressive rate hikes by the Federal Reserve will push the economy into a recession. Investors have faced a turbulent market over the past few months due to these concerns. The major indices have often oscillated wildly between gains and losses on any given day and remain in a broad slump.
“The multitude of cross-currents in the market suggests that caution is warranted,” Sandven said. Inflation surged as the economy recovered from the pandemic and demand for goods exceeded supply. But inflation heated up in February after Russia invaded Ukraine and triggered a spike in energy prices. Supply chain issues have worsened as China locks down cities in a bid to contain new COVID-19 cases.
The Fed is raising rates in an effort to slow economic growth to help soften the impact of rising inflation. But the economy is already slowing as consumers cut back on spending and Wall Street fears interest rate hikes could go too far and trigger a recession.
On the bond market, an alarm signal continued to ring out about a possible recession. The 10-year Treasury yield slipped to 2.92% from 2.98% late Monday. It remains below the two-year Treasury yield, which fell to 3.03%. Something like this doesn’t happen often, and some investors see it as a sign that a recession could hit within a year or two.
Wall Street is watching closely for any indicator that might signal that inflation is slowing. The Department of Labor will release its June report on consumer prices on Wednesday, followed by the release of its June report on prices that have a direct impact on businesses on Thursday.
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