- Big bank earnings, CPI data expected later this week
- US casino operators fall as Macau closes casinos
- Market-leading growth stocks drag down Nasdaq
- Indexes down: Dow 0.52%, S&P 1.15%, Nasdaq 2.26%
NEW YORK, July 11 (Reuters) – U.S. stocks lost ground on Monday as a lack of catalysts prompted market participants to head cautiously into a weekly back-end loaded with key inflation data and the unofficial start of the second-quarter earnings season. quarter.
Market-leading growth stocks dragged all three major U.S. stock indexes into negative territory as risk-averse sentiment was exacerbated by the first casino closure in Macau in more than two years to curb the spread of COVID-19. Read more
“It’s a nervous market,” said Rob Howarth, senior investment strategist at US Bank Wealth Management in Seattle. “It’s all about the start of earnings season and what the inflation (data) is telling us.”
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“We know that inflation is driven by supply constraints, and China is an important factor,” Howarth added. “And (the Macau shutdown) threw a cold blanket on the market this morning.”
Results from major banks including JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co are expected to kick off the second-quarter reporting season later this week.
The S&P 500 banking index (.SPXBK) was down 1.0%.
Analysts expect a sharp drop in year-on-year earnings as companies increase their loan loss provisions, fueling fears of an impending recession. Read more
Later in the week, a set of economic data – including consumer prices, retail sales and factory output – should provide a glimpse into the extent to which inflation has peaked and the economy has cooled as the Federal Reserve approaches a policy meeting next week, which is expected to end with the second consecutive 75 basis point rate hike.
“The market is trying to hedge ahead of this (CPI) print,” Howarth said. “We hope for a slowdown that would put the Federal Reserve in a more dovish position, but on the other hand, there are many reasons to believe that inflation may remain high and the Fed will remain hawkish.”
The market now expects the central bank to raise the Fed funds futures rate by 75 basis points in its latest salvo against red-hot inflation, a tactic some fear could tip the 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 biggest percentage decline, while Utilities (.SPLRCU) led the gains.
Before the big banks kick off the second-quarter earnings season in earnest on Thursday and Friday, results from PepsiCo and Delta Air Line ( DAL.N ) are expected on Tuesday and Wednesday, respectively.
As of Friday, analysts had seen S&P total annual earnings rise 5.7% for the April to June period, down from a forecast of 6.8% at the start of the quarter, according to Refinitiv.
Twitter Inc (TWTR.N) tumbled 11.3% after Elon Musk said he was ending his deal to buy the social media company. Read more
Shares in U.S. casino operators Las Vegas Sands ( LVS.N ), Wynn Resorts ( WYNN.O ) and Melco Resorts fell between 6.3 percent and 9.6 percent after Macau closed all casinos to contain the worst epidemic of COVID since the beginning of the health crisis. Read more
The broader S&P 1500 index of hotels, restaurants and leisure (.SPCOMHRL) was down 1.5%.
Declining issues outnumber rising ones on the NYSE by a ratio of 2.41 to 1; on the Nasdaq, a ratio of 2.81 to 1 favored the decliners.
S&P 500 posts two new 52-week highs and 30 new lows; The Nasdaq Composite recorded 20 new highs and 130 new lows.
Volume on US exchanges was 9.33 billion shares, compared to an 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
Our standards: The Thomson Reuters Trust Principles.
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