Los Angeles Times
Stock rally fades before earnings and rate updates
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 Standard & Poor’s 500 index fell 0.8% after having been up 1% 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 healthcare and technology stocks. Goldman Sachs rose 2.5% after reporting better profit for the spring than expected.
The Dow Jones industrial average fell 0.7%, and the Nasdaq composite lost 0.8%.
“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 close at 11,360.05. The Russell 2000 index of smaller companies dropped 5.96 points, or 0.3%, to 1,738.42.
The yield on the 10-year Treasury rose to 2.98% from 2.96% late Friday. The twoyear yield, which rose to 3.17%, is still above the 10year yield. Some investors see that as a sign of a recession in a year or two.
Underscoring worries about a recession have been recent reports showing slowdowns in parts of the economy because of the Fed’s rate increases.