U.S. stocks wavered Monday as investors reviewed a series of earnings reports for insight into the impact of higher inflation on companies and consumers.
The S&P 500 was down 0.2%, as the broad-market index shed some ground after morning gains. The Nasdaq Composite also ticked down 0.1%, after earlier flirting with a potential exit of the recent bear market. The Dow Jones Industrial Average was roughly flat.
Tech giant
Nvidia
declined 8.7% after reporting preliminary quarterly revenue that came in below analysts’ forecasts. The company said it expects challenging market conditions to persist in the third quarter.
Palantir Technologies
fell 12% after it issued guidance that missed Wall Street’s estimates.
Stocks have swayed in recent days, buffeted by shifting views on central bank policy. Friday’s better-than-expected jobs report divided investors and analysts. Some raised concerns that the Federal Reserve could continue raising interest rates aggressively, while others questioned whether the U.S. economy could really be in recession.
“Markets are still digesting the payrolls report from Friday. When you see what’s happening in the labor market, this doesn’t look like a recession in the sort of broad sense,” said
Kiran Ganesh,
a multiasset strategist at UBS. “Investors seem to be in the mood to listen to the good news.”
Trading volumes also tend to be lower in August while many traders take summer vacations, which can drive outsize moves, analysts said. For those still in the office, investors are awaiting U.S. inflation data for July out on Wednesday, a key release which is expected to provide more direction for markets.
“Clearly today, markets are showing a glass half full and they’re focusing a little bit more on the economy doing well and a little less on the Fed being more aggressive,” said
Chris Zaccarelli,
chief investment officer for Independent Advisor Alliance.
Though that could change, Mr. Zaccarelli added, if Wednesday’s inflation data comes in higher than expected.
Mr. Zaccarelli said his firm recently added more healthcare and small and mid-sized technology companies to its portfolios, and has maintained exposure to defensive sectors like consumer staples and utilities. “We were taking less risk early on, now we’re back to probably a neutral position,” he said.
The yield on the benchmark 10-year Treasury note edged down to 2.788% from 2.838% on Friday. The inverted yield curve continued to flash a recessionary signal, with the 2-year yield at 3.214%.
“What we infer from the bond market is that investors are positioning for a slowdown. Bond markets have started to increasingly price in a higher chance of a 75-basis-point hike in September,” said Karim Chedid, an investment strategist at BlackRock.
“Despite this, equities have somewhat held up. I think the reasons for it have to do with better-than-expected earnings so far this season,” Mr. Chedid said.
Traders worked on the floor of the New York Stock Exchange on Friday.
Photo:
angela weiss/Agence France-Presse/Getty Images
Berkshire Hathaway
added 0.5% after reporting quarterly results over the weekend. The investment firm’s operating earnings, CEO
Warren Buffett’s
preferred metric, rose although the company posted a net loss.
Tesla
rose 4%. The U.S. Senate passed a bill on Sunday to spend billions of dollars on climate, including the extension of a tax incentive for electric vehicles.
Signify Health
jumped 14% after The Wall Street Journal reported that drugstore chain
CVS Health
is planning to bid for the company.
Global Blood Therapeutics
climbed 4.4% after
Pfizer
agreed to buy the company for $5.4 billion.
Results are due after the closing bell from videogame firm
Take-Two Interactive Software,
vaccine-maker
Novavax,
insurer American International Group and News Corp, which owns The Wall Street Journal.
Overseas, the pan-continental Stoxx Europe 600 rose 1%. Retail investment firm Hargreaves Lansdown climbed 8% after reporting better-than-expected earnings and raising its guidance for 2023.
Oil prices slipped, with global crude benchmark Brent falling 1% to trade at $93.96 a barrel.
In Asia, major benchmarks were mixed. The Shanghai Composite Index added 0.3%, while Hong Kong’s Hang Seng Index slid 0.8%. Japan’s Nikkei 225 added 0.3%.
SoftBank reported a record $23 billion quarterly loss driven by the global selloff in tech stocks after markets closed in Tokyo. It said it used some of its
Alibaba
holdings to raise cash from lenders and shore up its finances. Shares of Alibaba fell 1.2%.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com
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