Stocks edge lower on Wall Street in uncertain trading

Stocks edged mostly lower on Wall Street Tuesday afternoon, as the market gave back some of its gains after a solid start to the year.

Trading was wobbly as the market kicked off a holiday-shortened, but earnings-heavy week.

The S&P 500 slipped 0.2% as of 3:32 p.m. Eastern. The tech-heavy Nasdaq composite rose less than 0.2%.

The Dow Jones Industrial Average fell 361 points, or 1.1%, to 33,938. The blue chip index was mostly weighed down by a 6.1% slide in Goldman Sachs, which reported dismal results as dealmaking dried up.

Big communications companies, and industrial and health care stocks were among the biggest weights on the market. Netflix fell 1.5%, Emerson Electric slid 6.9% and Pfizer dropped 3.7%.

Technology sector stocks were a bright spot. Chipmaker Nvidia rose 4.7%.

Bond yields remained relatively stable. The yield on the 10-year Treasury rose to 3.53% from 3.5% late Friday. Bond and stock markets were closed in the U.S. for Martin Luther King Jr. Day on Monday.

The broader market is coming off its best week in two months as investors review the latest round of corporate earnings to get a better sense of how much damage inflation is inflicting on the economy. Analysts still expect companies in the S&P 500 to report a drop in profits for the fourth quarter from a year earlier. That would mark the first such decline since 2020, when the pandemic was crushing the economy.

More importantly, investors are listening closely to financial updates from companies to get better determine whether inflation will continue squeezing consumes wallets and sapping corporate profits.

Several banks reported encouraging financial results last week, but also said a mild recession is likely on the horizon for the U.S. economy. United Airlines will report its latest results later Tuesday. M&T Bank and Netflix will report results on Thursday.

Inflation and how the Federal Reserve will continue its fight against high prices remains the big concern for investors as they review earnings results and corporate statements. Wall Street will also get another inflation update on Wednesday when the government issues its December report on inflation at the wholesale level, before prices are passed off to consumers. The government will also release retail sales data for December, which could give investors more insight into how inflation continues to affect consumer spending.

Inflation at the consumer level has been easing for six straight months, and that has given investors more hope that the Fed could soon consider softening its policy on interest rates. The central bank, though, has so far been adamant that it plans to continue raising rates this year and that it sees no rate cuts happening until 2024 at the earliest.

The central bank has raised its key overnight rate to a range of 4.25% to 4.50% from roughly zero a year ago. The Fed will announce its next decision on interest rates Feb. 1 Investors are largely forecasting a raise of just 0.25 percentage points next month, down from December’s half-point hike and from four prior increases of 0.75 percentage points.