US stocks see-saw amid corporate earnings

NEW YORK, Aug 2, (AP): US stocks shifted between small gains and losses in morning trading on Wall Street Tuesday as investors reviewed the latest corporate earnings for clues on inflation’s continuing impact.

The S&P 500 index fell 0.2% as of 11:18 a.m. Eastern. The Dow Jones Industrial Average fell 202 points, or 0.6%, to 32,594 and the Nasdaq was mostly unchanged.

Pricey technology stocks and industrial companies were among the biggest weights on the broader market. Microsoft fell 1.1% and Boeing slipped 2.7%.

Utilities and health care stocks gained ground. Intuitive Surgical rose 5.4% and NextEra Energy rose 1.2%.

The yield on the 10-year Treasury rose to 2.65% from 2.61% late Monday.

Corporate earnings remain a key focus for investors as they try to assess the health of the economy amid record high inflation, rising interest rates and recession fears.

Rideshare company Uber surged 15.1% after reporting surprisingly strong second-quarter revenue. Construction equipment maker Caterpillar fell 3.8% after the economic bellwether reported disappointing second-quarter revenue. Starbucks delivers its results later Tuesday.

Companies within the benchmark S&P 500 have been reporting mostly solid earnings, but many are also warning about weaker customer spending and higher costs because of ongoing supply chain issues. Businesses have raised prices on everything from food to clothing to maintain their profits.

Consumers are also getting squeezed by gas prices. While prices have come down recently, U.S. crude oil prices are still up 25% this year.

Central banks have been trying to rein in inflation by raising interest rates to slow economic growth. The Federal Reserve’s key short-term interest rate is at its highest level since 2018. That has Wall Street worried that the Fed could go too far and tip the economy into a recession.

Government data last week showed that the U.S. economy contracted in the second quarter, suggesting it could already be in a recession. Retail sales and other economic data show that consumers are pulling back on spending. But, recession fears have been softened by reports showing strong employment.

The Labor Department reported on Tuesday that American employers posted fewer job openings in June as the economy

contends with raging inflation and rising interest rates. Openings are a still-high 10.7 million. The job market has been resilient this year, and companies have complained that it is hard to fill open positions: Employers have added an average of 457,000 jobs a month in 2022; and unemployment is near a 50-year low.

The Labor Department’s jobs report for July, out Friday, is expected to show that employers tacked on another 250,000 jobs last month.

The S&P 500 gave up an early gain to end down 0.3% at 4,118.63. The Dow Jones Industrial Average dipped 0.1% to 32,798.40 and the Nasdaq fell 0.2% to 12,368.98. Smaller company stocks also gave back some of their recent gains, nudging the Russell 2000 0.1% lower to 1,883.31.

Bond yields mostly fell. The yield on the 10-year Treasury, which influences mortgage rates, fell to 2.60% from 2.65% late Friday.

August’s subdued opening follows a solid rally for stocks last month: July was the best month for the S&P 500 index since November 2020. Stocks have been falling for much of the year as investors worry about high inflation and rising interest rates. A key concern remains whether central banks will raise interest rates too aggressively and push economies into a recession.

A report last week showed that the US economy contracted last quarter and could be in a recession. Stocks’ recent rally came as worrisome economic reports gave some investors confidence

that the Fed can dial back its aggressive pace of rate hikes sooner than expected.

Asia

In Asian trading, Japan’s benchmark Nikkei 225 declined 1.4% to 27,594.73. South Korea’s Kospi slipped 0.5% to 2,439.62. Hong Kong’s Hang Seng dropped 2.4% to 19,689.21, while the Shanghai Composite dove 2.3% to 3,186.27. Australia’s S&P/ASX 200 edged 0.1% higher to 6,998.10. The Reserve Bank of Australia on Tuesday boosted its benchmark interest rate for a fourth consecutive month to a sixyear high of 1.85%. It was the third consecutive hike of half a percentage point. When the central bank lifted the rate by a quarter percentage point at its monthly board meeting in May, it was the first rate hike in more than 11 years.

The cash rate is now at its highest point since May 2016 when the bank cut the rate from to 1.75% from 2%.

Europe

France’s CAC 40 slipped 0.5% in early trading while Germany’s DAX fell 0.6%. Britain’s FTSE 100 inched up 0.1%.

On Monday, the S&P 500 gave up an early gain to end down 0.3% at 4,118.63. The Dow Jones Industrial Average dipped 0.1% to 32,798.40 and the Nasdaq fell 0.2% to 12,368.98. Smaller company stocks also gave back some of their recent

gains, nudging the Russell 2000 0.1% lower to 1,883.31.

High inflation continues to drag on markets along with the potential for further interest rate hikes from central banks that could unintentionally push economies into a recession.

More than half of the companies in the S&P 500 have reported their latest earnings results, which have been mostly better than expected. However, companies have also warned that inflation is weighing on customer spending and squeezing operations. Businesses have been raising prices to try to keep up profits.

Uber jumped 14% in premarket after the ridesharing company said rides increased by 24% and revenue more than doubled in the second quarter as as Americans headed back to offices and are going out more as anxiety over COVID-19 eases.

Oil

In energy trading, benchmark US crude gained 67 cents to $94.56 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose 52 cents to $100.55 a barrel.

Currencies

In currency trading, the US dollar edged down to 130.97 Japanese yen from 131.71 yen. The euro cost $1.0232, down from $1.0259.