U.S. stock indexes were lower Tuesday as investors monitored earnings reports and economic data ahead of inflation figures due later in the week.
The S&P 500 slipped 0.7%, a day after the broad index finished with modest losses. The Dow Jones Industrial Average slid 0.4% while the technology-heavy Nasdaq Composite fell 1.5%.
Investors await consumer-price data on Wednesday that could set expectations for how the Federal Reserve will approach monetary policy at its coming meetings. In recent weeks, better-than-expected corporate earnings and strong labor-market data have eased concerns about an imminent U.S. recession, helping stock markets rebound from their lows.
With inflation running at a multidecade high, investors say Wednesday’s consumer-price index update will be key to the outlook for rates and the direction of the market.
“The market has enjoyed a risk-on environment since the lows of mid-June, and investors interpreted Chair [Jerome] Powell as more dovish than he had hoped at the last Federal Reserve meeting,” said Quincy Krosby, chief global strategist for LPL Financial. “But today’s market is tomorrow’s market—Wednesday’s inflation data will provide a clearer picture as to whether this bear market is truly behind us.”
According to Ms. Krosby, inflation is the No. 1 concern for the market, including not only whether it is subsiding, but how quickly.
Earnings season is winding down, though some major companies are still set to report figures. Roblox, Coinbase Global and Wynn Resorts will release results after markets close. Chip maker
Micron Technology
fell 4.7% Tuesday after issuing a revenue warning, just a day after
Nvidia
offered similar preliminary guidance.
Norwegian Cruise Line Holdings
fell 11% after reporting a wider-than-expected quarterly loss. Shares of peer cruise line
Carnival Corporation
fell 5.7% as the pockets of the travel sector struggle to recover from its pandemic lows.
Energy stocks gained 1.7% in the morning session, led by shares of Occidental Petroleum which advanced 4.4% on the back of news Monday that Warren Buffett’s Berkshire Hathaway took its stake in the company past the 20% mark.
Traders worked on the trading floor at the New York Stock Exchange on Monday.
Photo:
ANDREW KELLY/REUTERS
Brent crude prices flip-flopped in Tuesday trading, swinging 1.8% in either direction. Barrels of the crude benchmark lurched into positive territory early in the morning after Moscow cut the flow of oil through a pipeline to Europe, and last traded nearly flat at $96.62 per barrel.
“Oil prices are still driven by the near-term macroeconomic outlook,” said
Robert Thummel,
managing director and senior portfolio manager of TortoiseEcofin. “Concerns remain that the Federal Reserve will continue slowing the economy if Wednesday’s inflation data comes in higher than expected, but markets still see persistent undersupply and high demand as creating upward pressure on oil prices.
Data released Tuesday showed U.S. labor productivity declined for a second straight quarter while labor costs were more elevated than economists expected.
The yield on the benchmark 10-year U.S. Treasury note edged up to 2.800% from 2.763% on Monday, while the two-year yield rose to 3.263% from 3.214%. With shorter-term yields significantly above longer-term ones, the yield curve remains inverted, a key recession indicator.
Overseas, the Stoxx Europe 600 fell 0.7%, with losses led by travel and technology firms. In Asia, stock markets were mixed. In Japan, the Nikkei 225 fell 0.9% while in China, the Shanghai Composite Index rose 0.3%. In Hong Kong, the Hang Seng Index weakened by 0.2%.
Write to Will Horner at william.horner@wsj.com and Eric Wallerstein at eric.wallerstein@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8