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Business

Stocks Rise on Services Data, Earnings

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U.S. stocks rose Wednesday as investors considered another wave of corporate earnings reports and after a key reading on the services sector hit a three-month high.

The S&P 500 rose 1.1%, recouping losses after it fell Tuesday. The Dow Jones Industrial Average added 0.9%. The Nasdaq Composite gained 1.8%. 

Stocks had come under renewed pressure in recent days from geopolitical tensions, as U.S. House Speaker

Nancy Pelosi

met with Taiwan’s president despite warnings from China. Meanwhile, Federal Reserve officials said the central bank is likely to continue raising interest rates at coming meetings, dampening hopes in markets that slowing economic growth could mean a change in policy.

But some better-than-expected earnings reports amid low liquidity in August are lifting sentiment, investors say.

“Markets are taking a bit of a breather to assess what’s going on globally. There is still a lot of inflation, central banks are keeping that hawkish rhetoric and we get some geopolitics on top of that,” said Olivier Marciot, global macro portfolio manager at Unigestion. But earnings have been pretty good, in terms of beating expectations, he added.

The yield on the benchmark 10-year Treasury note rose to 2.805% from 2.740% Tuesday. Weak economic data have weighed on yields in recent days, according to Michael Hewson, markets analyst at CMC Markets. There are “raised concerns that the U.S. economy could well be slowing sharply,” he said.

There have been concerns about the pace of the economy, and even whether a new recession is coming, but the U.S. services sector continued to expand in July, according to a report from the Institute for Supply Management. The ISM’s index of conditions for businesses like restaurants, hotels and retailers hit a three-month high in July.

The broader problem for investors is that whether or not the economy is technically in recession, inflation and the pressure it puts on the Fed to raise rates is resulting in an environment for investors that is fundamentally different from anything they have seen over the past several decades, said Eaton Vance portfolio manager Aaron Dunn. That won’t end soon, he said.

There has been a bounce back recently in some of the more beaten-up stocks, he said, but those hoping the growth trade returns may be disappointed. “Equities returns are going to be a grind.”

In corporate news,

PayPal

shares jumped 10% after hedge fund Elliott Management confirmed it has a $2 billion stake in the payments company. Starbucks rose 2.7% after it said demand is still strong and raising prices partially offset higher labor costs.

Vaccine maker

Moderna

rose 16% after it posted earnings above analysts’ estimates and said it would begin a new $3 billion share repurchase program.

Airbnb

declined 4.7% after it said it swung back to profit but its outlook disappointed investors. Online dating group

Match

tumbled 17% after posting results that missed estimates and said the CEO of Tinder is leaving the firm. 

Chip maker

Advanced Micro Devices

fell 3% after it reported a drop in profit and issued guidance for the current period that came below Wall Street’s expectations. 

Clorox,

MGM Resorts,

and insurers

MetLife

and

Allstate

are scheduled to report earnings after markets close.

Oil prices fell after an OPEC+ meeting where a committee suggested a smaller-than-expected production increase, according to delegates. U.S. crude fell 2.5% to $92.10.

Traders worked on the floor of the New York Stock Exchange on Tuesday.



Photo:

ANDREW KELLY/REUTERS

Overseas, the pan-continental Stoxx Europe 600 ticked up 0.4%. British-listed cybersecurity firm

Avast

soared 43% after a U.K. regulator said it has provisionally cleared

NortonLifeLock’s

$7.3 billion acquisition of the company. French

bank Société Générale

rose 2.9% after reporting a narrower loss than analysts expected, despite its exit from Russia.

In Asia, major benchmarks were mixed. The Shanghai Composite Index ticked down 0.7%, extending losses after it closed down 2.3% on Tuesday. Hong Kong’s Hang Seng added 0.4% and Japan’s Nikkei 225 rose 0.5%.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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Business

Stocks Waver to Kick Off August Trading

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U.S. stocks wavered Monday to start a new month of trading after finishing July with their best month since 2020. 

Major indexes edged lower in early afternoon trading and spent much of the day flitting between gains and losses. The S&P 500 recently dropped 0.6%, while the Dow Jones Industrial Average fell 0.4%. The technology-focused Nasdaq Composite Index lost 0.5%.

Shares of

Boeing

rose 5.8% after the plane maker temporarily avoided a strike at three defense manufacturing plants and cleared a regulatory hurdle for resuming deliveries of its 787 Dreamliner.

U.S. stocks mounted a furious recovery in recent weeks, boosted by positive signals from earnings and expectations that the Federal Reserve may not need to raise interest rates as aggressively as once thought, spurring a rally in government bonds alongside stocks. 

“The market’s beginning to price in the end of Fed tightening rather quickly, and I think it’s going to be disappointed. I think the market’s a bit ahead of itself here,” said Thomas H. MacCowatt, partner at Williams Jones Wealth Management. 

Last week, officials approved another 0.75-percentage-point interest-rate increase. But traders are now betting that the size of rate increases will be smaller for the rest of the year.

“This has been a very rapid repricing of bond and equity markets,” said

Edward Park,

chief investment officer at U.K. investment firm Brooks Macdonald. “I fear, however, it might be a bit premature based on what was said out of the Federal Reserve last week.” 

Mr. Park noted that Monday’s weakness in stock futures suggested investors are likely taking a breather after the S&P 500 finished Friday with a 9.1% gain for July. He added that traders are in “wait and see” mode ahead of Friday’s jobs report. Economists surveyed by The Wall Street Journal expect the U.S. economy to have added 250,000 jobs in July, down from 372,000 in June.

Strong employment is the remaining pillar propping up consumer sentiment and stopping the economy from seeing a “full-blown recession,” said Aoifinn Devitt, chief investment officer of Moneta.

“We are probably well poised for another good end to the summer. I see a lot of the negative negative news has been baked in,” Ms. Devitt said.

Investors’ expectations for a less aggressive Fed have been evident in federal-funds futures, which are used by traders to place bets on the course of interest rates. Such futures on Monday morning showed a nearly 69% probability that the Fed will raise its key interest rate by half a percentage point in September, up from just 44% last week, according to CME Group. They also are assigning a smaller probability to a 0.75-percentage-point increase compared with a week ago.

Shifting expectations for central-bank policy for the rest of the year have scrambled other areas of financial markets in recent days, upending some trades that have flourished this year. The U.S. dollar, for example, which has staged a prolonged rise in 2022, fell on Monday for a fourth consecutive session, with the WSJ Dollar Index losing 0.6%. 

The Japanese yen, meanwhile, advanced again, rising 0.8% against the dollar. The yen’s recent rise has challenged a popular trade on Wall Street this year: betting against the Japanese currency.

In the bond market, the yield on the 10-year U.S. Treasury note traded at 2.61%, down from 2.642% Friday. The yield on the benchmark note has come down significantly from its closing high of 3.482% reached in June.

The yield on the two-year Treasury note, meanwhile, traded at 2.892%, compared with 2.897% Friday, to keep the so-called yield curve inverted. That market signal, which occurs when short-term Treasury yields trade higher than long-term yields, is often seen as a key predictor of a recession. 

In individual companies, U.S.-traded shares of

Alibaba

moved 0.9% lower after the company said it would work to stay listed on the New York Stock Exchange. The Securities and Exchange Commission on Friday added Alibaba to a list of Chinese companies at risk of being delisted from the U.S. exchanges if their auditors can’t be inspected before spring 2024.

Shares of

EVO Payments

surged 23% to $33.71 after

Global Payments

said it would buy the payments-technology company and pay $34 a share in an all-cash deal. Global Payments shares rose 4.8%.

Shares of

PerkinElmer

rose 5.8% after it announced it will sell its applied, food and enterprise services business to private-equity firm New Mountain Capital for $2.45 billion in cash.

Later Monday, investors will parse earnings from companies including Diamondback Energy,

Pinterest

and

Activision Blizzard,

all of which report after the closing bell.

In energy markets, Brent crude fell 3.9% to $93.81 a barrel.

A trader worked on the floor of the New York Stock Exchange on Wednesday.



Photo:

BRENDAN MCDERMID/REUTERS

Overseas, the pan-continental Stoxx Europe 600 dipped 0.2%. London-traded shares of

HSBC Holdings

rose 6.1% after the global banking giant said profit rose 62% in the second quarter from a year earlier.

In Asia, indexes ended mostly higher, despite data showing Chinese manufacturing activity unexpectedly contracted in July. China’s Shanghai Composite rose 0.2% and Japan’s Nikkei 225 jumped 0.7%.

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Corrections & Amplifications
Economists surveyed by The Wall Street Journal expect the U.S. economy to have added 250,000 jobs in July. A previous version of this article stated that economists expected that the U.S. economy added that many jobs in June. (Corrected on Aug. 1)

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Business

U.S. Stocks Rise, Putting S&P 500 on Track for Best Month Since 2020

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The S&P 500 rose Friday to stay on track for its best month in almost two years, clawing back some of its losses from a dismal first half.

The broad U.S. stock index is on pace to gain 8.4% in July, its strongest monthly showing since November 2020. The Dow Jones Industrial Average is on track to rise 6.1% for the month, and the tech-heavy Nasdaq Composite to climb 11%.

Investors have taken comfort in recent days from the idea that slowing economic growth might encourage the Fed to raise rates at a slower clip. They also have been encouraged by positive signals during earnings season, as expectations for quarterly profit growth rose over the past month.

But money managers and strategists are also debating whether stocks can hold onto the recent gains in the face of continued monetary tightening and worrisome signals about the economy. Many are skeptical.

“It seems like the market has prematurely declared victory over inflation,” said

Sameer Samana,

senior global market strategist at Wells Fargo Investment Institute. “It’s completely out of step with what the Fed and Chair Powell laid out this week.”

On Friday the S&P 500 rose 0.8%, while the Dow industrials added 0.4%, or about 135 points. The tech-heavy Nasdaq Composite advanced 0.9%. All three gauges are on course for weekly as well as monthly gains. Still, the S&P 500 is down 14% so far this year.

Data Friday showed robust growth in consumption and wages, potentially keeping pressure on the Federal Reserve to raise interest rates to bring inflation under control. Worker pay and benefits rose 1.3% in the second quarter—a near record pace—and consumer spending rose 1.1% in June, accelerating from May.

Federal Reserve Chairman Jerome Powell said the central bank raised interest rates by three-quarters of a percentage point and signaled that more large increases to combat high inflation could be coming. Photo: Manuel Balce Ceneta/AP

The energy group led the S&P 500’s sectors Friday with a gain of 3.5%, while the communication services segment brought up the rear with a 1.2% decline.

Among individual stocks,

Procter & Gamble

shares fell 5.8% after the maker of Gillette razors and Ariel laundry products said buyers were starting to cut back spending after months of rapid inflation.

Amazon.com

shares jumped 11% after the tech company said quarterly revenue grew faster than analysts had expected.

Apple

shares added 2.2% after it reported that iPhone sales continued to grow in the recent quarter.

Shares of Intel dropped 10% on a surprise quarterly loss.

Roku

shares tumbled 26% after the maker of streaming hardware said key revenue drivers would come under pressure in the second half of the year.

High energy prices propelled Chevron to record earnings of $11.6 billion in the second quarter, pushing shares up 8.1%. Fellow oil giant

Exxon Mobil

posted profits of $17.9 billion, lifting the stock 3.9%.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note edged down to 2.647% from 2.680% on Thursday. Yields move in the opposite direction of bond prices, and have fallen in recent weeks on expectations the Federal Reserve will soon slow the pace at which it is raising interest rates.

Investors are closely focused on any hint from the central bank about the future path of monetary policy.

After raising its benchmark interest rate by 0.75 percentage point for a second straight meeting Wednesday, the Fed indicated that at some stage it will likely ease off to gauge the effects of higher rates on the economy. About 72% of S&P 500 companies that have reported quarterly results have beaten profit forecasts, soothing money managers who feared earnings would begin to slide.

But many investors remain cautious about the outlook for the economy and stocks. With inflation at a 40-year high, some say central banks in the U.S. and elsewhere will remain in a hurry to raise rates. Adding to nerves, data this week showed the U.S. economy shrank for a second quarter in a row.

“The key takeaway is that they’re not falling off a cliff,” said Brian O’Reilly, head of market strategy at Mediolanum International Funds, of earnings. “Consumer demand is still relatively strong.”

Nonetheless, Mr. O’Reilly thinks the bounce in stocks will fade. “We’re still facing a pretty dicey economic backdrop,” he said, adding that there are few signs that inflation is peaking.

Traders working on the floor of the New York Stock Exchange this week.



Photo:

Spencer Platt/Getty Images

Overseas markets were mixed. The Stoxx Europe 600 rose 1.3%.

Chinese stocks dropped after a quarterly government economic meeting failed to provide a stimulus package. The Politburo, China’s top policy-making body, on Thursday all but acknowledged that the country would miss its annual growth target this year. It signaled the government would stick to its zero-tolerance Covid measures and take only cautious steps to support the ailing property market.

Hong Kong’s benchmark Hang Seng Index fell 2.3%. China’s benchmark Shanghai Composite closed down 0.9%. 

The selloff of China tech stocks followed a Wall Street Journal report that billionaire

Jack Ma

is planning to relinquish control of Ant, an affiliate of

Alibaba.

The move could delay Ant’s initial public offering for a year or longer.

Elsewhere in Asia, the Nikkei 225 index in Tokyo was flat, while South Korea’s Kospi Composite edged up 0.7%.

Write to Joe Wallace at joe.wallace@wsj.com, Rebecca Feng at rebecca.feng@wsj.com and Karen Langley at karen.langley@wsj.com

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Business

Stocks Rise Ahead of Fed Decision

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U.S. stocks rose, boosted by a series of better-than-expected earnings reports, as investors awaited a critical interest-rate decision from the Federal Reserve. 

The S&P 500 climbed 0.9% Wednesday, rebounding a day after the broad benchmark index fell 1.2%. The Dow Jones Industrial Average advanced 0.4%, and the Nasdaq Composite jumped 1.6%.

Shares of megacap technology companies jumped after Microsoft and Google parent Alphabet reported earnings that were better than investors feared.

Microsoft,

despite suffering its slowest earnings growth in two years, gave an upbeat outlook for its full-year guidance, sending shares 4.3% higher.

Alphabet

shares advanced 3.7% after its results, which showed slowing sales growth, came in better than investors expected.

This week is a pivotal and busy week in financial markets, and traders around the world are awaiting an interest-rate decision from the Fed. The U.S. central bank is expected to lift its federal-funds rate by 0.75 percentage point, to a range between 2.25% and 2.5%, Wednesday afternoon.

Investors will be watching for any clues from central bankers on the size of further interest-rate increases this year—and whether officials expect to then turn around and begin cutting rates next year.

The U.S. stock market has performed well on days when the Fed has raised rates this year, Bespoke Investment Group noted Tuesday. Still, a 0.75-percentage-point increase Wednesday would mark the Fed’s second consecutive increase of that magnitude this year. The Fed hasn’t lifted rates that quickly since the 1980s.

“We want to hear what [Fed Chairman Jerome] Powell is thinking about the inflation outlook and what he is thinking about the growth outlook,” said

Seema Shah,

chief global strategist at Principal Global Investors. “But we have to be careful. We’ve learned in the last couple of months that we can’t read too much into any broad guidance.”

In the bond market, the yield on the benchmark 10-year U.S. Treasury note edged up to 2.792%, from 2.786% Tuesday. Yields rise when bond prices fall. The yield on the two-year note, meanwhile, rose to 3.063%, from 3.041% the day before.

Short-term yields have been elevated this year as investors have prepared for the Fed to keep aggressively raising interest rates, keeping the U.S. Treasury yield curve inverted. That signal is often seen as a key recession predictor.

Stocks are on track to close July with gains, though many investors don’t expect gains to be long-lasting. 

“It doesn’t mean that a recession isn’t going to happen within the next couple of quarters,” Ms. Shah said. “This is your ultimate bear-market rally.”

Investors have grown increasingly worried that the Fed could plunge the U.S. into a recession through tighter policy. Second-quarter gross-domestic product data on Thursday will provide insight into the economy’s recent performance.

Evidence is growing that the Federal Reserve has fallen well behind on inflation and needs to make up for lost time. WSJ’s Dion Rabouin explains how we got here and what the Fed is doing to catch up. Illustration: Ryan Trefes

Investors are also monitoring earnings results this week, the busiest of the earnings season, for clues about how companies are navigating decades-high inflation.

In earnings Wednesday,

Shopify

warned it expects higher inflation and rising rates to pressure consumers’ wallets, and noted that the strength of the U.S. dollar weighed on results. The company reported a loss in the second quarter, a day after The Wall Street Journal reported this week that the company is cutting 10% of its global workforce. Its stock added 3.2%.

Sherwin-Williams

‘ shares fell 12.1% after reported a decline in profit amid lower-than-expected sales, as the paint-and-coating manufacturer contended with high raw-material costs.

Boeing

reported a drop in sales and profit as it awaited regulatory approval to resume deliveries of its wide-body 787 Dreamliner. Still, its shares rose 2.7% after the company said it expects positive free cash flow for 2022.

Results from

Spotify Technology

and

Hilton Worldwide Holdings

offered investors some good news. Spotify shares climbed 12.5% after the music-streaming giant reported accelerated user growth and a rise in advertising revenue for the second quarter. Hilton Worldwide Holdings shares jumped 4.7% after the hotel chain raised its full-year earnings guidance.

Qualcomm

and

Facebook

parent Meta Platforms will report after Wednesday’s close.

Shares of growth and technology companies also rallied.

PayPal Holdings

jumped 8.2% after The Wall Street Journal reported that activist investor Elliott Management Corp. has a stake in the company. Meta climbed 2.6%, while

Peloton Interactive,

a pandemic-era darling, advanced 0.5%.

Traders worked on the floor of the New York Stock Exchange on Monday.



Photo:

Spencer Platt/Getty Images

Overseas, the Stoxx Europe 600 advanced 0.4%.

Credit Suisse

shares added 2.4% after the Swiss bank named a new chief executive and reported earnings that were worse than analysts expected. Shares of

Deutsche Bank

fell 2.7% after the bank, which reported a sharp rise in second-quarter profit, warned the months ahead will be challenging.

In energy markets, Brent crude, the international benchmark for oil prices, rose 1% to $100.45 a barrel.

In Asia, Hong Kong’s Hang Seng Index fell 1.1%, while China’s Shanghai Composite lost about 0.1%. Japan’s Nikkei 225 gained 0.2%.

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Business

U.S. Stocks Wobble After Three-Day Rally

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U.S. stocks wobbled between small gains and losses Friday, trying to extend a three-day winning streak, as investors parsed earnings reports from Twitter and other companies.

The S&P 500 fell 0.1%, a day after the broad benchmark index jumped 1%. The Dow Jones Industrial Average edged up 0.2%, recently adding 60 points, and the Nasdaq Composite declined 0.6%.

A sharp drop in Snap shares weighed on shares of technology companies and added fuel to investor fears about the state of business growth. Snap lost 32% after posting its weakest quarterly sales growth as a public company. The  parent company of popular photo-sharing social-media app Snapchat said it would substantially reduce its rate of hiring.

Meanwhile, Twitter shares fell 1.2% after the company posted a loss and noted that revenue was hurt by uncertainty related to

Elon Musk’s

acquisition. 

Other megacap technology companies, including

Meta Platforms

and

Alphabet,

also pulled back, falling 6% and 3%, respectively. Meanwhile,

American Express

shares rose 3.8% after the company reported a 31% rise in revenue.

A look at the markets shows asset managers are moving money around in ways that suggest they see a recession coming. WSJ’s Dion Rabouin explains what to look for and why they tell us investors are increasingly pricing in a recession. Illustration: David Fang

Even with Friday’s wobbles, the S&P 500, the Dow and the Nasdaq are all on pace to end the week with solid gains, offering a respite to investors who have seen their portfolios pummeled this year. A stretch of earnings reports this week have given investors confidence to wade in and scoop up beaten-down stocks.

Netflix

and

Tesla

were among the companies that exceeded Wall Street expectations, sending their shares soaring to become two of the S&P 500’s best performers this week.

With a 3.5% rise for the week through Thursday, the S&P 500 is on pace to cap its best week in a month. Nonetheless, few investors are willing to call a bottom to a selloff that has dragged the S&P 500 down 16% this year. Persistently high inflation, the possibility of a recession and the war in Ukraine remain at the forefront of investors’ minds. Next week’s meeting of the Federal Reserve, as well as coming gross domestic product data, could inject more volatility in the markets. 

Some investors say they have jumped back into the market in recent weeks to take advantage of bargains, noting that extreme bearish sentiment is often a contrarian signal. BofA Global Research this week reported “max bearish” sentiment among investors in its Bull & Bear Indicator. 

“There’s lots of metrics that point to negativity on equities. That’s a good starting point for us and what has given us more confidence” to add to equity positions, said John Roe, head of multiasset funds at Legal & General Investment Management.

High inflation, the possibility of a recession and the war in Ukraine remain on investors’ minds.



Photo:

BRENDAN MCDERMID/REUTERS

Meantime, investors are maintaining a close eye on Europe, which has been beset by concerns about the cost of living and an energy crisis that could push economies into recession. On Friday, fresh business surveys suggested that the eurozone economy contracted in July. Excluding pandemic lockdown months, this would mark the first contraction signaled by purchasing managers’ indexes since 2013.

Still, the pan-continental Stoxx Europe 600 gained 0.5%. Shares of

Uniper

fell around 20% following the news that Germany would take a 30% stake in the company and provide a bailout deal after it was hit hard by dwindling supplies of Russian gas. 

Traders remain focused on the flow of Russian natural gas through the critical Nord Stream pipeline, as well as the ripple effects from the resignation of Italian Prime Minister

Mario Draghi.

Italy’s benchmark FTSE MIB stock index rose 0.7%. Brent crude fell 0.6% to $98.87 a barrel Friday. 

The euro retreated 0.4% against the dollar to $1.0185, raising the possibility that Europe’s common currency could reach parity again. 

In bond markets, the yield on the benchmark 10-year U.S. Treasury note fell to 2.795%, down from 2.908% Thursday. Yields fall when bond prices rise. 

In Asia, trading was fairly flat. Hong Kong’s Hang Seng Index rose 0.2%, while China’s Shanghai Composite lost 0.1%. Japan’s Nikkei 225 gained 0.4%.

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Business

Stocks Open Higher as Banks Give Updates

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U.S. stocks rose in early Monday trading as investors considered another set of earnings reports from major companies and looked ahead to a week of key central-bank meetings.

The S&P 500 advanced 0.9% after the broad index on Friday ended higher, snapping a five-day losing streak. The blue-chip Dow Jones Industrial Average added 0.7% while the technology-heavy Nasdaq Composite Index gained 1.4%.

Big financial firms kicked off a bumper week of earnings reports Monday.

Bank of America

rose 2.4% after it said second-quarter profits declined 32%.

Goldman Sachs

advanced 5.3% after reporting better-than-expected earnings.

Synchrony Financial

rose 3.9% after reporting earnings per share that fell year-over-year but were better than analysts had expected.

Charles Schwab

gained less than 1% after reporting second-quarter profits rose by 42%, also beating Wall Street expectations.

IBM

will report later in the day. Companies due to provide updates later this week include

Johnson & Johnson

on Tuesday,

Tesla

on Wednesday and

Twitter

on Friday.

Investors are trying to reconcile a dire economic outlook with earnings forecasts that remain relatively positive. Economic growth is showing signs of slowing while inflation is soaring, last week reaching a fresh four-decade high. Meanwhile, central banks are raising interest rates rapidly, adding another cloud on the economy’s horizon. So far, corporate reports have been lackluster.

“It feels like something is wrong: Either the economic story is wrong or analysts are being too optimistic on earnings, and it feels like the latter,” said Altaf Kassam, head of investment strategy for Europe, the Middle East and Africa at State Street Global Advisors. “If you scrape the text of company earnings announcements, many are complaining.”

WSJ’s Dion Rabouin breaks down how inflation rises and why the Federal Reserve, Congress, the president and large corporations can all be held accountable. Illustration: Ryan Trefes

Data due Monday were expected to show declining confidence among U.S. home builders as mortgage rates are rising. Economists surveyed by The Wall Street Journal expect the National Association of Home Builders to report a seventh consecutive month of declining confidence in July. 

The European Central Bank is expected to raise interest rates for the first time in 11 years at a meeting Thursday. The region’s economy is feeling the effects of the war in Ukraine and an energy crisis more acutely than other economies. The Bank of Japan is expected to buck the trend among global central banks and keep rates unchanged on Thursday. 

The Federal Reserve has signaled it will raise interest rates by 0.75 percentage point for the second time in a row later this month.

Commodity prices rebounded following a stretch of weakness. Brent crude, the international oil benchmark, rose 3.8% to $105.03 a barrel. Copper prices in London rose 2.6% to $7,362 a metric ton. Gold prices rose 0.6%.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note rose to 2.978% from 2.929% on Friday. Bond yields and prices move in opposite directions.

Traders worked on the floor of the New York Stock Exchange last week.



Photo:

Michael M. Santiago/Getty Images

Overseas, global markets were higher across the board. In Europe, the pan-continental Stoxx Europe 600 rose 1.1%. Oil-and-gas and mining stocks led the gains as commodity prices rose, while banks also rose. Commodity trader and miner

Glencore

rose 2.5% while oil major

Shell

gained 2.6%. Germany’s

Commerzbank

and

Deutsche Bank

each rose around 4%.

In Hong Kong, the Hang Seng Index jumped 2.7% while in mainland China, the Shanghai Composite Index rose 1.6%. Markets in Japan were closed for a holiday.

—Pia Singh contributed to this article.

Write to Will Horner at william.horner@wsj.com

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Business

Stocks Open Mixed, Oil Falls on Growth Concerns

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U.S. stock indexes were mixed shortly after the opening bell, continuing a volatile stretch for global markets.

The S&P 500 slid 0.3% Tuesday, a day after the benchmark stocks gauge skidded  1.2%. The Dow Jones Industrial Average added 0.2%. The technology-focused Nasdaq Composite fell 0.6%.

Oil prices and bond yields fell, dragged lower by worries that major economies are headed toward a recession. Brent-crude futures, the benchmark in international energy markets, fell 4.9% to $102.26 a barrel a barrel.

In the bond market, the yield on 10-year Treasurys slipped to 2.906% from 2.990% Monday. Yields, which move inversely to prices, have drifted lower since late June on expectations that an economic slowdown would prod the Federal Reserve to pull interest rates back down in 2023.

For now, though, the Fed is intent on pushing rates up in an attempt to tame decades-high inflation. Investors say that campaign, coupled with signs that the U.S. economy is losing momentum, could spell more pain for markets after a rough first half of the year. Adding to the challenges for money managers are China’s struggle to contain Covid-19 and the war in Ukraine.

“There is going to be a recession, but we’re not there yet,” said Philip Saunders, co-head of multiasset growth at

Ninety One,

an asset manager based in the U.K. and South Africa. “The key thing that is going on is that financial liquidity is retracting.”

A look at the markets shows asset managers are moving money around in ways that suggest they see a recession coming. WSJ’s Dion Rabouin explains what to look for and why they tell us investors are increasingly pricing in a recession. Illustration: David Fang

Meanwhile, data from the National Federation of Independent Business showed confidence among small-business owners fell to its lowest level in almost a decade in June.

Among individual stocks,

PepsiCo

rose 0.1% after the drinks company said second-quarter profits and revenue beat analysts’ forecasts.

Earnings season among major U.S. companies will pick up speed later in the week with results due from major financial institutions. Investors will pay particular attention to comments by bank executives on the trajectory of the economy, and to the effects of higher input costs on profit margins.

Elsewhere in commodities, copper forwards on the London Metal Exchange fell 2.6% to just over $7,400 a metric ton. The industrial metal, a barometer for the world economy because of its use in construction and heavy industry, has slumped by over a fifth over the past month and is more than 30% below the all-time high of over $10,000 a metric ton recorded in March.

One factor that has weighed on commodities in recent weeks has been a stronger dollar. The greenback’s rally stalled Tuesday, pushing the WSJ Dollar Index down 0.1%. On Monday it rose 1.1%, lifting the dollar to its highest level against a basket of other currencies since 2002.

Traders worked on the floor of the New York Stock Exchange on Monday.



Photo:

Michael M. Santiago/Getty Images

International stocks retreated. The Stoxx Europe 600 lost 0.1%. China’s Shanghai Composite Index lost 1%, Hong Kong’s Hang Seng fell 1.3% and Japan’s Nikkei 225 dropped 1.8%.

-Gunjan Banerji contributed to this article.

Write to Joe Wallace at joe.wallace@wsj.com.

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Business

U.S. Stocks Fall Ahead of Inflation Data, Earnings Season

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U.S. stocks fell to start the week as investors prepare for fresh inflation data and corporate earnings that could influence the Federal Reserve’s path ahead for interest-rate increases.

The S&P 500 fell about 1% as the broad-market index started the week off on a negative note. The Nasdaq Composite Index shed 1.9% as technology stocks lost ground. The Dow Jones Industrial Average was 0.4% lower. 

Stocks staged a recovery in recent days, with the S&P 500 rising nearly 2% last week. The rally cooled on Friday after a stronger-than-expected jobs report showed the labor market is still hot, raising the probability that the Federal Reserve could continue with aggressive interest rate increases and potentially cause a recession. The next key data release, the U.S. consumer-price index for June, is on Wednesday.

“It’ll be interesting to see how the market trades following that news,” said

Charlie Ripley,

senior investment strategist for Allianz Investment. “It doesn’t appear like we’re going to have a decline in inflation any time soon.”

Investors are also awaiting corporate earnings reports for indications of how much higher prices and weaker consumer sentiment have eroded companies’ profits. Americans expect lower inflation increases over the longer run, a new Federal Reserve Bank of New York report said. 

“We’re in a backdrop where central banks are going to continue raising interest rates and the underlying market narrative continues to be one of potentially rising recession risks. We’re going to see markets react to different data points, react to earnings,” said

Laura Cooper,

a macro strategist at BlackRock. “That sets us up for quite a volatile period ahead.” 

“We’re cautious on equities, we’re not advocating for ‘buy the dip’ at this current juncture,” Ms. Cooper said.

Major financial firms including JPMorgan Chase and Morgan Stanley are scheduled to report earnings on Thursday, followed by BlackRock, Citigroup and Wells Fargo on Friday. KBW Nasdaq Bank Index was down about 1% in recent trading.  

Many household-name firms are also set to post earnings this week, including PepsiCo on Tuesday and

Delta Air Lines

on Wednesday. 

“These are going to be huge bellwethers on consumer confidence, on spending. The guidance will be really important, these guys have incredible insight about how the consumer is behaving and how they expect this to evolve over the rest of the year,” said

Fahad Kamal,

chief investment officer at Kleinwort Hambros. 

Twitter

TWTR -9.26%

fell 8%.

Elon Musk

filed a statement on Friday evening, saying he was terminating his $44-billion bid for the social-media company, saying it had violated the merger agreement. Twitter also put out a statement indicating it will sue Mr. Musk.  

A look at the markets shows asset managers are moving money around in ways that suggest they see a recession coming. WSJ’s Dion Rabouin explains what to look for and why they tell us investors are increasingly pricing in a recession. Illustration: David Fang

Other tech stocks fell, with

Facebook

parent Meta Platforms recently down 4.4% and

Netflix

lost 3.7%. Shares of

Broadcom

were down 3.2% after after the microchip company announced the departure of its president.

Bond markets continued to flash a key warning sign. The U.S. yield curve remained inverted, with yields on shorter-dated bonds above those of longer-dated debt. The yield on the benchmark 10-year Treasury note edged down to 2.994% from 3.098% on Friday. The two-year Treasury yield was at 3.035%.

Oil prices extended their decline. Brent, the global benchmark for crude, retreated 1.5% to trade at $102.86. It fell more than 4% last week.

It is about “the concern that we are going to see a sharp decline in demand on the back of the deteriorating growth backdrop,” Ms. Cooper said. “That’s notably playing out in the commodity space.”

Cryptocurrencies also came under more pressure. Bitcoin traded around $20,500, a 6% drop from its level at 5 p.m. ET on Friday. Ether tumbled 8%. 

Overseas, the pan-continental Stoxx Europe 600 slid 0.4%, while the euro continued to trade near parity with the U.S. dollar. The Nord Stream pipeline which transports Russian gas to Germany and other Western European countries shut for planned maintenance starting Monday.

Uniper

fell 16%, extending last week’s 30% plunge. The utility has asked for a bailout from the German government, saying it has been hit by dwindling gas supplies.

JPMorgan Chase and Morgan Stanley will report earnings later this week.



Photo:

BRENDAN MCDERMID/REUTERS

In Asia, most major benchmarks declined. Chinese stocks dropped after Shanghai reported its first local case of the BA.5 Omicron subvariant on Sunday, and the country recorded more than 2,300 locally transmitted Covid-19 cases nationwide over the last seven days. The Shanghai Composite Index slipped 1.3% and Hong Kong’s Hang Seng Index fell 2.8%. 

Officials in Macau set a weeklong shutdown of casinos and other businesses to combat the surge in cases. Gambling stocks tumbled, with

Sands China

sliding 8.2%,

Wynn Macau

shedding 6.7% and

Galaxy Entertainment Group

down 4.9%.

Over the weekend, Beijing fined some of the country’s largest internet companies for failing to make proper antitrust declarations, weighing on tech stocks.

Alibaba,

Tencent Holdings and Ping An Healthcare & Technology, which were named in the latest executive punishment notices, fell 5.8%, 2.9% and 3.4%, respectively. 

In Japan, the Nikkei 225 index rose 1.1% on Monday after current Prime Minister Fumio Kishida’s ruling coalition won the majority of parliamentary seats in an election on Sunday. The Japanese yen dropped to a fresh 24-year low of more than 137 against the dollar.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com, Rebecca Feng at rebecca.feng@wsj.com and Pia Singh at Pia.Singh@wsj.com

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Corrections & Amplifications
Beijing fined tech companies for failing to make proper antitrust declarations over the weekend. An earlier version of this article incorrectly said it happened on Monday. Also, China recorded more than 2,300 locally transmitted Covid-19 cases nationwide over the last seven days. An earlier version of this article incorrectly said the country reported 3,300 locally transmitted cases nationwide over the weekend. (Corrected on July 11)

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Business

U.S. Stocks Dip as Jobs Growth Remains Strong

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U.S. stocks lost ground after the monthly jobs report beat expectations, heading toward strong weekly gains.

The S&P 500 was down 0.3% in recent trading, a day after the benchmark index jumped 1.5% to log a fourth consecutive gain, its longest winning streak since March. The Dow Jones Industrial Average dropped 0.1%. The tech-focused Nasdaq Composite lost 0.5%.  

The June jobs report showed that rising interest rates and high inflation are so far not affecting hiring, which remains strong. The U.S. economy added 372,000 jobs in June, well above the 250,000 expected by economists surveyed by The Wall Street Journal.

Some analysts said that the strong jobs report increased chances that the Fed would proceed with a 0.75-percentage-point increase at its next meeting. The Fed in June raised interest rates by that much, marking its largest interest-rate increase since 1994.

“It gives the Fed a little bit more confidence that it can move aggressively without severely hurting the labor market,” said

Mona Mahajan,

senior investment strategist at Edward Jones. 

However, Ms. Mahajan said that historically, such aggressive interest-rate hikes eventually dent the economy.

“At some point they will hit the real economy,” she said.

For the most part, investors have lately gotten a respite from the heavy selling across markets that has dominated for much of the year. The S&P 500 has risen 1.7% this week, while the Dow has added about 0.8%. The tech-heavy Nasdaq has jumped 3.9%.

Throughout the week, many investors returned to a familiar trade: Buying shares of tech companies. The S&P 500’s technology and communication services groups have been among the biggest winners. The

ARK Innovation ETF

has soared almost 16% this week.

Some weak economic figures in recent weeks have led investors to question how aggressively the Fed will raise interest rates to fight inflation down the road. Lately, data have shown a drop in activity in industries ranging from manufacturing to home construction, accelerating worries among traders that the economy is headed for a recession. 

Of course, the latest jobs figures show that the labor market remains strong, providing solace to some investors that fears of a recession may be overblown and yet another conflicting signal about the path of the economy.

This week, U.S. central bankers reaffirmed their commitment to fighting inflation, first in minutes from the Fed’s June meeting, and then again on Thursday when two Fed officials signaled support for another 0.75-percentage-point interest-rate increase later this month. Both also indicated that recession fears may be overblown. 

“I think there has been this relief that central banks, particularly the Federal Reserve, will get a handle on inflation,” said

Susannah Streeter,

senior investment and markets analyst at Hargreaves Lansdown.

Amid a record hiring streak in the U.S., economists are watching for signs of a possible wave turn. WSJ’s Anna Hirtenstein looks at how rising interest rates, high inflation, market selloffs and recession risks challenge the growth of America’s workforce. Photo: Olivier Douliery/AFP

In corporate news,

Twitter

fell 3.9% after it said Thursday it would lay off 30% of its talent-acquisition team.

GameStop

sank 3.4% after the retailer also said it was cutting staff and terminated its finance chief.

U.S. stocks on Thursday posted their fourth consecutive session of gains.



Photo:

Michael Nagle/Bloomberg News

Still, many expect the release of inflation data and the start of second-quarter earnings season next week to bring more choppiness.

Fears of a recession on the horizon have rippled through stock, bond and metals markets lately. Economists surveyed by The Wall Street Journal have dramatically raised the probability of a recession recently and the prospect of one has sent copper prices sharply lower while spurring a rare inversion in the bond market.

A closely watched recession predictor, the yield curve, remained inverted Friday, with the yield on two-year government bonds trading higher than the 10-year equivalent. The yield on the benchmark 10-year Treasury note rose after the monthly jobs report to trade at 3.095%, up from 3.007% Thursday. 

The yield on two-year government bonds traded at 3.113%, up from 3.039% in the previous session. Yields fall when bond prices rise. 

Elsewhere in markets, Brent crude, the international benchmark for oil prices, ticked up. Earlier this week, oil prices plunged. Brent most recently gained 0.3% to $104.88 a barrel.

The dollar climbed, with The WSJ Dollar Index, which measures the greenback against a basket of 16 currencies, up 0.2%. The euro fell 0.2% to trade around $1.0147, putting the common currency within striking distance of parity, or equal value with the dollar.

Overseas, the pan-continental Stoxx Europe 600 edged up 0.5%, finishing the week up 2.5%. In Asia, trading was mixed. Hong Kong’s Hang Seng rose 0.4%, while the Shanghai Composite fell 0.2%. In Japan, the Nikkei 225 finished up 0.1%, paring earlier gains following news that former Prime Minister

Shinzo Abe

was shot during a speech. Mr. Abe later died.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com and Gunjan Banerji at gunjan.banerji@wsj.com

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Business

Stocks Open Higher Ahead of Powell Testimony

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U.S. stocks advanced ahead of a second day of testimony from Federal Reserve Chairman

Jerome Powell

after he warned that rapidly rising interest rates threatened a recession. 

The S&P 500 added 0.4% in early trading Thursday. The technology-heavy Nasdaq Composite Index rose 0.4% while the blue-chip Dow Jones Industrial Average also edged up 0.4%. 

Investors have mostly shed riskier assets in recent days, prompted by growing concerns that efforts by the Federal Reserve to bring inflation under control will take a toll on the economy. Investors are growing less optimistic that the Fed can engineer a so-called soft landing, whereby interest rates rise to curb inflation without pushing the economy into a recession. 

Mr. Powell acknowledged those risks in testimony to lawmakers Wednesday, saying that a recession was possible and that a soft landing for the economy would be “very challenging.” Mr. Powell is set to continue that testimony Thursday in front of a second group of lawmakers. 

Federal Reserve Chairman Jerome Powell said that interest rates would continue to rise until the central bank sees clear proof that inflation is slowing, but conceded that elevated rates could lead to a recession. Photo: Elizabeth Frants/Reuters

The S&P 500 closed down 0.1% Wednesday following Mr. Powell’s remarks, while the Dow Jones Industrial Average lost 0.2%. 

“Markets are in a real state of flux right now,” said Stephen Innes, managing partner at SPI Asset Management. “I don’t think the market is moving into bullish territory by any means.”

Large technology companies were leading gains premarket, with

Nvidia,

Snap

and

Amazon

each up around 0.9%.

The Labor Department said 229,000 Americans applied for unemployment benefits last week. Jobless claims—one of the earliest indicators of weakness in the labor market—remain at historically low levels. A gauge of activity in the manufacturing and service sectors is due shortly after the opening bell. 

In bond markets, Treasury yields declined for a second day though remained close to their highest level in more than a decade. The yield on the benchmark 10-year U.S. Treasury note fell to 3.099% from 3.155% on Wednesday. Bond yields fall as prices rise.

The U.S. dollar firmed, with the WSJ Dollar Index, which measures the currency against a basket of its peers, rising 0.1%.

In Europe, the pan-continental Stoxx Europe 600 was flat. Business surveys released Thursday showed Europe’s economy slowed sharply in June as soaring consumer prices undercut demand for a range of goods and services. 

“Inflation is at the center of all this, but there is also fading growth, and interest rates are going up. All of that together is a horrible cocktail and you just need to step aside and wait for that to work itself out,” said Hani Redha, a portfolio manager at PineBridge Investments.

A trader at the New York Stock Exchange on Wednesday.



Photo:

BRENDAN MCDERMID/REUTERS

European gas prices jumped after Germany took a step closer to rationing gas by triggering the second step of an emergency plan to deal with curtailed Russian supplies. The region’s gas prices gained more than 5% to €134.25 a megawatt hour, their highest level since March. 

Bitcoin rose 3.9% from its 5 p.m. ET level on Wednesday to $20,668.90. The cryptocurrency has steadied in recent days after a sharp selloff earlier in the month.

In commodity markets, oil prices wavered after sharp losses Wednesday. Brent crude, the international oil benchmark, weakened 0.5% to $108.16 a barrel. Other commodities whose demand is closely correlated to the economy also slipped. Copper prices in London fell 2.6% to $8,555.50 a metric ton.

Soaring energy prices have been a key contributor to the multidecade high inflation currently roiling global economies. Concern that a recession would see demand for oil fade was prompting investors to sell the commodity, said Mr. Redha. 

“I have said for a while there will be no bottom in equities without also a sustainable top in oil prices and bond yields,” he said. “I think that is potentially under way.”

In Asia, stock markets mostly rose. In Hong Kong, the Hang Seng Index rose 1.3% while in mainland China the Shanghai Composite Index rose 1.6%. In Japan, the Nikkei 225 added 0.1%.

Write to Will Horner at william.horner@wsj.com

Navigating the Bear Market

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