Wall Street stock indexes fell on Monday amid concerns of weak corporate profits due to the impact of rising inflation, closing out earnings season this week in earnest.
About minutes into trading, the Dow Jones Industrial Average was down 164.34 points, or 0.52%, at 31,173.81, the S&P 500 was down 42.84 points, or 1.10%, at 3,856.54, and the Nasdaq Composite was down 221.09 points, or 1.90%. at 11,414.22.
Twitter fell 6.7% after Elon Musk announced late Friday that he would drop his $44 billion offer to buy the social media platform, while the microblogging site said it would impose its commitment to the buyout on the billionaire. will sue.
European markets fell as the closure of a major gas pipeline from Russia to Germany for annual maintenance led to concerns that Russia might not resume gas flow as scheduled.
Wall Street was off to a strong start this month after the first half of 2022, but traders are anticipating another round of heavy selling if big US companies don’t live up to expectations in July.
The Nasdaq is set to break its five-day winning streak, weighed down by sharp declines in heavyweights Apple Inc., Microsoft Corp. and Amazon.com Inc. in early trading.
The market is largely pricing in a 75-basis-point rate hike later in July, though concerns about the pace of future hikes have grown following a stronger-than-expected jobs report on Friday.
The report, which indicated a still strong labor market, helped ease some fears about an immediate recession, but added to concerns about more aggressive monetary policy by the Fed to stamp out rising inflation.
Wall Street will get some important updates on inflation this week. The US government will release its June report on the impact of inflation on consumer prices on Wednesday and a report on Thursday on the impact on prices for businesses.
Delta Air Lines accelerated its latest round of corporate earnings this week with its latest results report on Wednesday. JPMorgan Chase will report results on Thursday, while Citigroup and Wells Fargo will report on Friday.
Robert Pavlik, senior portfolio manager at Dakota Wealth, said, “People are not only concerned that earnings are going to weaken due to the economic slowdown, but the rising US dollar is also creating headwinds for earnings for multinationals. ” management.
According to Pavlik, banks, which mostly benefit from rising interest rates, are also expected to be impacted by weakness in M&A activity and advisory business.
The increase in loan loss reserves is expected to impact second quarter profits of large US banks.
US consumer price data later this week will also be looked at to assess inflation conditions and how aggressively the Fed can respond.
US casino operators Las Vegas Sands, Wynn Resorts and Melco Resorts were down between 7.8% and 10.3% when Macau closed all of its casinos for the first time in more than two years to curb the spread of the coronavirus pandemic.
The decline issues to a 3.42-to-1 ratio on the NYSE and to a 3.46-to-1 ratio on the Nasdaq.
The S&P index recorded a new 52-week high and 29 new lows, while the Nasdaq recorded 12 new highs and 25 new lows.
The US Federal Reserve is aggressively raising interest rates to slow economic growth and quell inflation.
The major concern for Wall Street is whether the central bank puts too much brakes on economic growth and pushes the economy into recession. Concerns have risen as economic indicators are already pointing to a slowing economy.