US stocks waver as earnings reports for companies begin

Sunlight shines on the facade of the New York Stock Exchange, Friday, July 8, 2022, in New York. U.S Stocks are edging higher in early trading on Wall Street Tuesday, July 12, 2022, as traders brace for a big week of news on inflation and company earnings reports. (AP Photo/John Minchillo, File)

Stocks wavered in afternoon trading on Wall Street Tuesday as traders brace for a big week of news on inflation and company earnings reports.

The S&P 500 slipped 0.1% as of 2:20 p.m. Eastern. The Dow Jones Industrial Average rose 63 points, or 0.2%, to 31,237 and the Nasdaq was 0.1% lower.

Energy prices fell broadly, weighing on energy stocks. The price of U.S. crude oil slumped 7.7%, and Hess fell 3.4%.

Technology companies also lost ground, keeping gains elsewhere in the market in check. Pricey values for technology stocks tend to push the broader market higher or lower. Microsoft fell 3.2%. Health care stocks also fell. Pfizer slid 1.5%.

Banks and industrial companies led the gainers. Bank of America rose 1.2% and General Electric rose 3.6%.

Travel-related companies were among the biggest gainers. United Airlines climbed 8.5%, American Airlines jumped 10.9% and cruise line operator Carnival rose 8.4%.

Big companies are beginning to report their latest quarterly results. Soft drink and snack maker PepsiCo was mostly unchanged after releasing a profit report that easily beat analysts’ estimates.

Clothing company Gap fell 2.7% after announcing that CEO Sonia Syngal is stepping down from her role after two years on the job.

Investors are preparing for more earnings from big companies this week as they try to determine just how much damage pervasive inflation is inflicting on consumers and businesses. Expectations for second-quarter results appear subdued. Analysts are forecasting 5.1% growth for companies across the S&P 500, which would be the weakest since the end of 2020, according to FactSet.

“We'll get more color in the next couple of weeks about how the economy is shaping up, through the lens of companies,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.

Delta Air Lines will report its latest results on Wednesday and provide more insight into the travel industry's recovery from the pandemic. Major banks including JPMorgan Chase and Citigroup are on tap later this week.

The key concerns on Wall Street remain inflation and whether aggressive rate hikes from the Federal Reserve will push the economy into a recession. Investors have had to deal with a turbulent market over the last several months because of those concerns. Major indexes have often swung wildly between gains and losses on any given day and remain in a broad slump.

“The multitude of crosscurrents in the market place suggest that caution is warranted,” Sandven said. Inflation jumped as the economy recovered from the pandemic and demand for goods outpaced supplies. But, inflation heated up in February after Russia invaded Ukraine and sparked a jump in energy prices. Supply chain problems have worsened as China locks down cities in an effort to contain new COVID-19 cases.

The Fed is raising rates in an effort to slow economic growth to help temper the impact from rising inflation. But, the economy is already slowing down as consumers ease up on spending and Wall Street is worried that interest rate hikes could go too far and bring on a recession.

In the bond market, a warning signal continued to flash about a possible recession. The yield on the 10-year Treasury slid to 2.97% from 2.98% late Monday. It remains below the two-year Treasury yield, which fell to 3.05%. Such a thing doesn’t occur often, and some investors see it as a sign that a recession may hit in the next year or two.

Wall Street is keeping a close watch on any indicator that could signal inflation is easing. The Labor Department on Wednesday will release its June report on consumer prices, following with a Thursday release of its June report on prices directly impacting businesses.