Stocks drop as investors eye earnings

Financial updates might offer more clues to inflation effects

Stock indexes on Wall Street closed mixed Tuesday, as investors focus on a busy week of corporate earnings for insight into how much damage inflation is inflicting on the economy.

The S&P 500 slipped

0.2 percent, ending a fourday winning streak. The Dow Jones Industrial Average fell 1.1 percent, mostly because of a big drop in Goldman Sachs after the investment bank’s results came in far below analysts’ estimates as dealmaking dried up.

Gains in technology stocks helped the Nasdaq composite eke out a 0.1 percent gain, extending the techheavy index’s winning streak to a seventh day.

The mixed start to the holiday-shortened week follows a solid start to the year for

Wall Street after a dismal 2022. The broader market is coming off its best week in two months, but investor sentiment could quickly turn as companies report their results for the October-december quarter.

Analysts still expect companies in the S&P 500 to report a drop in profits for the fourth quarter from a year earlier. That would mark the first such decline since 2020, when the pandemic was crushing the economy.

More importantly, investors are listening closely to financial updates from companies to get better determine whether inflation will continue squeezing consumers’ wallets and sapping corporate profits.

“We haven’t gotten much forward guidance from companies for the coming year yet, and that’s really what we’ll be focused on,” said

Bill Merz, head of capital market research at U.S. Bank Wealth Management. “And it may be that forward guidance continues to be light in terms of content, because companies simply don’t know.”

Several banks reported encouraging financial results last week, but also said a mild recession is likely on the horizon for the U.S. economy. Among the companies reporting their latest results this week: Netflix, M&T Bank and Procter & Gamble.

All told, the S&P 500 fell 8.12 points to 3,990.97.

The Dow dopped 391.76 points to 33,910.85. The Nasdaq rose 15.96 points to 11,095.11.

Small company stocks also gave back some of their recent gains. The Russell 2000 index fell 2.75 points, or 0.1 percent, to close at 1,884.29.

Bond yields remained relatively stable. The yield on the 10-year Treasury rose to 3.54 percent from 3.5 percent late Friday.