‘The market would like to see some certainty’

Stocks were wobbling between small gains and losses Monday ahead of a wave of earnings reports from big U.S. companies coming out this week.

The S&P 500 index was up 0.1% as of 11:40 a.m. Eastern. The Dow Jones Industrial Average was up 67 points, or 0.2%, to 34,936 and the Nasdaq composite was mostly unchanged. On Friday, the S&P 500 rose 1.1% to a fresh record, rebounding from the previous day’s loss.

Stocks in the benchmark S&P 500 were roughly split between gainers and losers with bank stocks rising solidly and technology stocks falling. Trading was muted, with a few stocks making big moves on little news.

L Brands jumped 4.1% after the company’s board approved splitting the Victoria’s Secret and Bath & Body Works units into two separate companies. Virgin Galactic fell 12.2% followed up a successful spaceflight with plans to sell up to $500 million in stock.

Earnings season kicks off this week. The big Wall Street banks report their results starting Tuesday starting with JPMorgan Chase and Goldman Sachs. Also reporting this week will be Bank of America, Citigroup and Wells Fargo. A handful of other big companies report this week, including Delta Air Lines, PepsiCo and UnitedHealth Group.

Expectations are high this quarter for publicly traded companies. The pandemic is waning, and all of the United States effectively reopened again in the last quarter as vaccine availability became widespread. Investors will be looking to see not only what sort of profits these companies brought in the last three months, but also what their outlook is now that things are normalizing.

Corporate earnings are expected to be up 64% from a year earlier, according to FactSet.

That would be the biggest year-over-year growth since 2009, when corporate profits started recovering from the Great Recession.

Ultimately investors are going to need these companies to deliver this season. Stocks have risen sharply in the past year on the backs of expectations that corporate profits would rebound once the pandemic ends. Without strong profits, it will be increasingly difficult for investors to justify these high stock prices and record market valuations.

“This needs to be more of a confirmation process this earnings season,” said Scott Wren.

Investors are closely watching what companies say about the future in the latest round of earnings, now that the economy is shaking off the worst impact from the pandemic and companies have a clearer view ahead.

“The market has an expectation for the economy and interest rates and it’s a matter of whether company’s are going to acknowledge this or are they going to be cautious,” Wren said. “The market would like to see some certainty.”

As investors keep an eye on corporate earnings, there are also lingering worries about the highly contagious delta coronavirus variant that is spreading quickly across much of the world. Places in the U.S. being hit particularly hard by the delta variant include the South, where vaccine hesitancy and resistance is more common. There are some worries that these areas may have to reimpose restrictions. European markets opened lower Monday. Investors have swung between optimism about an economic recovery and unease about the spread of the highly contagious delta variant of coronavirus. They appear to be less worried lately as governments step up vaccination campaigns.

“Wall Street shrugged off ‘delta variant’ concerns,” Mizuho Bank said in a report.

In early trading, the FTSE 100 in London fell 0.6% to 7,075.75 and the DAX in Frankfurt lost less than 0.1% to 15,682.92. The CAC in Paris sank 0.3% to 6,508.93.

On Monday in Asia, the Shanghai Composite Index rose 0.7% to 3,547.84 after China’s central bank reduced the level of reserves commercial banks must hold, freeing up money for lending. That followed signs China’s economic rebound might be weakening.

The Nikkei 225 in Tokyo surged 2.2% to 28,569.02 and the Hang Seng in Hong Kong gained 0.6% to 27,515.24.

The Kospi in Seoul advanced 0.9% to 3,246.47 and Sydney’s S&P-ASX 200 rose 0.8% to 7,333.50.

India’s Sensex lost 0.2% to 52,282.88. New Zealand and Southeast Asian markets also advanced.

Over the weekend, the president of the European Central Bank, Christine Lagarde, told investors to prepare for new guidance on monetary policy after the bank’s July 22 meeting. But she gave no indication whether the bank would start winding down stimulus.

The Federal Reserve jolted investors earlier by moving up the possible start of interest rate hikes to late 2023 instead of the following year. It said its board members have started to discuss when and how to wind down bond purchases that inject money into capital markets.

This week, U.S. banks are due to report earnings as major companies begin announcing quarterly results. Analysts expect another strong quarter for Wall Street, due to the improving economy and fewer Americans defaulting on loans.

Benchmark U.S. crude lost 87 cents to $73.69 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.62 on Friday to $74.56. Brent crude, used to price international oils, shed 86 cents to $74.69. It advanced $1.43 the previous session to $75.55.

The dollar declined to 110.09 yen from Friday’s 110.17 yen. The euro retreated to $1.1873 from $1.1875.