Stocks end a wobbly day mixed and just shy of record highs

Trader John Porcelli works on the floor of the New York Stock Exchange, Tuesday, July 13, 2021. Stocks are opening broadly higher on Wall Street Wednesday, July 14 as several big companies reported results that were better than analysts were expecting. The S&P 500 was up 0.5%. (AP Photo/Richard Drew)

Wall Street capped a wobbly day of trading with mixed results Wednesday, as a rally in technology stocks was kept in check by a slide in banks and energy companies.

The S&P 500 eked out a 0.1% gain after recovering from an early stumble and then losing much of its momentum by late afternoon. The benchmark index recovered some of its losses from a day earlier, but finished just short of its all-time high set on Monday.

The Nasdaq composite slipped 0.2% despite gains by several big tech companies including Apple. Small company stocks continued to lag the broader market.

Investors had a mixed reaction to a new batch of earnings news from banks, airlines and other companies, as well as the latest report showing another rise in inflation. They also kept an eye on the latest comments on inflation from the Federal Reserve chair, who reaffirmed the Fed's view that the surge in costs across the economy is temporary.

“Investors right now are focusing on earnings because they are still buying what the Fed is saying about inflation (and) that it’s too early to start to raise rates and potentially slow a reopening economy,” said Sam Stovall, chief investment strategist at CFRA.

The S&P 500 rose 5.09 points to 4,374.30. The Dow Jones Industrial Average added 44.44 points, or 0.1%, to 34,993.23. The Nasdaq slipped 32.70 points to 14,644.95. The Russell 2000 index of smaller companies slid 36.51, or 1.6%, to 2,202.36.

Wall Street is closely watching the latest round of earnings for confirmation about the scale and pace of the economic recovery as people return to work, travel again and generally try to get back to some semblance of normal following the worst of the virus pandemic.

Banks mostly fell even after several of them turned in solid earnings reports. Citigroup gave up an early gain and fell 0.3%, despite reporting a more than five-fold rise in profits, helped by an improving economy that resulted in fewer bad loans on the bank’s balance sheet. Wells Fargo rose 4% for the biggest gain in the S&P 500 after reporting its most profitable quarter in two years.

Mixed results from Bank of America disappointed investors. It fell 2.5% after reporting solid profits, but weak revenue.

Airlines showed more signs of recovery as people begin to resume travel for work and leisure. American Airlines rose 3% after giving investors an encouraging update on its second-quarter financial picture.

Outside of earnings, investors are still closely watching measures of inflation to better gauge how it could impact the recovery. Inflation at the wholesale level jumped 1% in June, pushing price gains over the past 12 months up by a record 7.3%. The news on wholesale prices followed a report Tuesday that consumer prices increased in June by 0.9% and were up 5.4% over the past 12 months, the biggest 12-month gain in 13 years.

Federal Reserve Chair Jerome Powell suggested in testimony to a House committee that inflation will likely remain elevated, but eventually moderate, reinforcing the central bank's position that rising inflation is a temporary impact from the recovering economy. A key concern for investors has been how quickly the Fed will shift its interest rate policies in the face of rising inflation, but it has signaled there is no imminent change coming.

Long-term bond yields were mostly lower. The yield on the 10-year Treasury note fell to 1.34% from 1.41% late Tuesday.

“If the market were truly worried by the inflationary numbers then the 10-year note (yield) probably would have gone up," Stovall said.

Energy companies had some of the biggest losses, partly due to a 2.8% drop in the price of benchmark U.S. crude oil. Occidental Petroleum fell 7.5% for the biggest drop in the S&P 500, while Cabot Oil & Gas slid 5%.

Technology stocks notched solid gains, led by a 2.4% increase in Apple following a published report that the consumer electronics giant planned to increase production of iPhones.