Early rally fades as profit reports ramp up

Stocks closed lower on Wall Street on Monday after an early rally evaporated by midafternoon, marking a choppy start to a week full of updates on the two things that set stock prices: how much profit companies are making and where interest rates are heading.

The S&P 500 fell 0.8 percent after having been up 1 percent in the early going, The index broke a five-day losing streak at the end of last week. Gains in energy producers, big retailers and other companies that rely on consumer spending were outweighed by a pullback in health care and technology stocks. Goldman Sachs rose after reporting better profit for the spring than expected.

The Dow Jones Industrial Average fell 0.7 percent and the Nasdaq composite lost 0.8 percent.

“It was a pretty big gain earlier today, and it’s all gone,” said Liz Young, head of investment strategy at SoFi.

Young expects the market to remain volatile through July, mainly because of earnings season. Johnson & Johnson, American Airlines and Tesla are among the dozens of S&P 500 companies that are scheduled to issue quarterly snapshots this week.

“This is the first earnings season in the cycle where we’re probably going to get some pretty negative guidance and we’re going to hear about where companies are being squeezed and they’re going to be changing their outlook,“she said.

The S&P 500 fell 32.31 points to 3,830.85. The Dow slid 215.65 points to 31,072.61, and the Nasdaq gave up 92.37 points to 11,360.05. The Russell 2000 index of smaller companies also fell. It dropped 5.96 points, or 0.3 percent, at 1,738.42.

Earnings season kicked off last week, and banks have dominated the early part of the schedule for reporting how much they earned from April through June.

Goldman Sachs was among the latest to report, and it rallied 2.5 percent after its profit and revenue were better than analysts expected. Bank of America closed essentially flat after it fell short of analysts’ profit expectations. Despite all the worries about a possible recession, Bank of America said its customers’ spending and deposits remain strong.

In the bond market, the yield on the 10-year Treasury rose to 2.98 percent from 2.96 percent late Friday. The two-year yield, which rose to 3.17 percent, is still above the 10-year yield.

Underscoring worries about a recession have been recent reports showing slowdowns in parts of the economy because of the Fed’s rate hikes.

The housing market has felt the effect of more expensive mortgage rates. A measure of sentiment among home builders released Monday weakened more than expected and sank to its lowest level in two years.