Stocks drop slightly ahead of corporate earnings and inflation data

Stocks closed lower on Wall Street after a wobbly trading day on Tuesday as investors wait for more inflation and corporate earnings data this week.

The major indices hovered between small gains and losses for much of the day, before sales picked up steam in the closing minutes of trading. The S&P 500 slipped 0.2% after rising 0.3% at the start.

The Dow Jones Industrial Average fell 0.3% and the Nasdaq composite slipped 0.1%. Smaller company stocks, an indicator of confidence in economic growth, outperformed the market as a whole, pushing the Russell 2000 Index up 0.6%.

Technology, communications and healthcare companies accounted for a large chunk of the S&P 500’s losses. Intel closed 2.4% lower, while AT&T was down 2.3% and parent company of Google, Alphabet, 1.8%. Johnson & Johnson fell 1.6%.

A mix of retailers and other businesses that rely on direct consumer spending has gained ground. Ford rose 3.6% and Lowe’s 0.5%. Real estate and utilities stocks also rose.

The decline in the S&P 500 marked the index’s third consecutive decline. After two days, the index’s losses offset its 0.8% gain last week.

The sale suggests investors fear they will be disappointed with the upcoming third-quarter corporate earnings season, said Sam Stovall, chief investment strategist at CFRA.

“Investors are looking at higher rates, higher inflation, higher oil prices and are thinking of the worst,” Stovall said. “But when we see other factors, such as small caps doing well or the market not really going down as much as it could, that kind of signals to me that there is an underlying strength and that investors are just waiting for a better return. period. “

The S&P 500 lost 10.54 points to 4,350.65. The Dow Jones lost 117.72 points to 34,378.34. The Nasdaq lost 20.28 points to 14,465.92. The Russell 2000 gained 13.63 points to 2,234.27. Most of the European and Asian markets closed lower.

US crude oil prices closed above $ 80 a barrel. The 10-year Treasury yield fell to 1.57% from 1.60% on Friday night. The bond market was closed Monday for Columbus Day.

The market at large has been turbulent for weeks. Investors are trying to figure out how the economy will continue to recover, with COVID-19 remaining a threat and rising inflation can hurt consumer spending and business finances. The latest round of earnings reports will give Wall Street a clearer picture of how businesses are doing in the last quarter amid an increase in COVID-19 cases. It will also provide a better understanding of how they expect to behave during the rest of the year.

S&P 500 companies are expected to post 27.6% annual profit growth for the July-September quarter, according to FactSet. This is down from the 28.1% growth estimated by analysts in July.

JPMorgan Chase will release the banks’ results on Wednesday. Bank of America, Wells Fargo and Citigroup will follow with their latest quarterly results on Thursday.

Investors will also be closely following the latest inflation updates from the Ministry of Labor. It will release its consumer price index for September on Wednesday, which is a measure of how inflation is putting cost pressure on consumers. More information on inflationary pressures for businesses will be released on Thursday when the Labor Ministry releases its producer price index.

A wide range of industries are feeling the effects of rising inflation with higher costs for shipping and raw materials. Many companies have warned that their bottom lines could suffer from supply chain issues.

The tightening of the supply chain has also raised the prices of many products for consumers, which could hurt consumer spending and further delay economic recovery. Investors will receive an update on consumer spending when the Commerce Department releases its September retail sales report on Friday.