Saturday, November 27, 2021

Stocks edge lower ahead of company earnings, inflation data

Shares closed lower on Wall Street on Tuesday after a volatile day of trading as investors wait for more data on inflation and corporate earnings this week.

Major indices swung between small gains and losses for most of the day, before a selloff intensified in the last minutes of trading. The S&P 500 slipped 0.2% after being up 0.3% in the opening round.

The Dow Jones Industrial Average fell 0.3% and the Nasdaq Composite slipped 0.1%. Smaller company stocks, a gauge of confidence in economic growth, outperformed the broader market, with the Russell 2000 Index moving 0.6% higher.

Technology, communications and health care companies all made losses in the S&P 500. Intel closed 2.4% lower, while AT&T dropped 2.3% and Google’s parent company Alphabet dropped 1.8%. Johnson & Johnson fell 1.6%.

A mix of retailers and other companies that rely on direct consumer spending gained ground. Ford added 3.6% and Lowe’s added 0.5%. Real estate and utilities stocks also rose.

The pullback in the S&P 500 marked the index’s third straight decline. Two days later, the index’s losses have offset its 0.8% gain from the previous week.

Sam Stovall, chief investment strategist at CFRA, said the sale shows investors are worried they will be disappointed with the company’s earnings reporting season for the upcoming third quarter.

“Investors are looking at higher rates, higher inflation, higher oil prices, and worst-case scenarios,” Stovall said. “But when we look at other factors, such as whether small-caps are doing well or the market is not really falling as much as it could, it indicates to me that there is underlying strength and investors are looking for better re-entry. Waiting. Point.”

The S&P 500 fell 10.54 points to end at 4,350.65. The Dow fell 117.72 points to end at 34,378.34. Nasdaq lost 20.28 points to close at 14,465.92. The Russell 2000 rose 13.63 points to 2,234.27. European and Asian markets closed mostly lower.

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US crude oil prices closed above $80 a barrel. The yield on the 10-year Treasury fell to 1.57% from 1.60% late Friday. The bond market was closed for Columbus Day on Monday.

The broader market has been choppy for weeks. Investors are trying to figure out how the economy will continue its recovery as COVID-19 continues to be a threat and rising inflation is potentially weighing down consumer spending and corporate finances. The latest round of earnings reports will give Wall Street a clearer picture of how companies fared in the most recent quarter amid a surge in COVID-19 cases. It will also shed light on how they expect to perform during the rest of the year.

According to FactSet, annual earnings of S&P 500 companies are expected to increase by 27.6% for the July-September quarter. This is down from the 28.1% growth predicted by analysts in July.

JPMorgan Chase will open earnings for the banks on Wednesday. Bank of America, Wells Fargo and Citigroup will follow up on their latest quarterly results on Thursday.

Investors will also keep a close watch on the latest updates on inflation from the Labor Department. It will release its consumer price index for September on Wednesday, a gauge of how inflation is pressing costs for consumers. Additional information on inflationary pressures for businesses will be released Thursday when the Labor Department releases its producer price index.

A wide range of industries are feeling the pinch from rising inflation coupled with high cost of shipping and raw materials. Many companies have warned that their financial results could be affected due to supply chain problems.

Supply chain constraints also raise the prices of many goods for consumers, which can hurt consumer spending and spur economic recovery. Investors will get an update on consumer spending when the Commerce Department releases its retail sales report for September on Friday.


Nation World News Desk
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