Wall Street drifts as earnings roll in, natural gas soars
NEW YORK — Stocks are drifting in mixed trading Monday, as worries about interest rates and inflation keep a lid on Wall Street despite some better-than-expected profit reports.
The S&P 500 was 0.1% lower, coming off its second straight week of losses. The other major U.S. stock indices were also affected by the small gains and losses. The Dow Jones Industrial Average was down 39 points, or 0.1%, at 34,411, as of 11: 30 a.m. Eastern time, and the Nasdaq composite was 0.4% lower.
Stocks are struggling this year, as the highest level of inflation in generations forces Federal Reserve to reverse its low-interest-rate policies which have helped markets soar in recent years and the economy rev.
The central bank has already raised short term rates once. Investors are expecting it to do so again in a few weeks. Investors are also being prepared by the Fed for a sharp reversal of its massive efforts to keep long-term rates low.
That has the 10-year Treasury yield close to its highest level since 2018, at 2. 84% on Monday. Higher yields mean lower prices for all investments, from gold and cryptocurrencies to cryptocurrencies. The stocks that are most expensive tend to be the hardest hit. This puts the spotlight on high-growth stocks and big technology companies, which were the ones that survived the pandemic. The Nasdaq, which is home to many of these stocks, has fallen behind the rest of market this year. Smaller stocks also faltered Monday, with the Russell 2000 index down 0.5%.
Counterbalancing that was some encouragement following better-than-expected profit reports. Synchrony Financial saw a 4.7% increase after it reported that it earned more in the first three month of the year than Wall Street had expected. It also increased its dividend and plans to buy back its stock.
Bank of America saw 3.2% growth after reporting higher profits than analysts expected.
They’re among the first companies to tell investors how much they earned at the start of 2022, and expectations are relatively subdued. Analysts are forecasting roughly 5% growth for S&P 500 companies, the slowest since the end of 2020, according to FactSet. Much of that is because it’s difficult to keep growing profits at such a high pace following a year of better than 30% growth. But inflation could also be reducing profits after a year in which big companies have successfully passed almost all of their price increases onto customers. As oil and natural gas prices continue to rise,
Energy producers are still big winners from inflation. Natural gas leaped again Monday, with the U.S. price up 7.5% and near its highest level since 2008. As European customers seek to avoid Russian gas supplies, the war in Ukraine is driving up demand for U.S. oil.
The price of benchmark U.S. oil, meanwhile, rose 0.9% to $107. 95 per barrel. Brent crude, the international standard, gained 1% to $112. 87, and that had energy stocks in the S&P 500 up 0.8%, the biggest gain among the 11 sectors that make up the index.
Shares on Twitter rose 4.6% in the initial trading session after the company announced a plan that would make it more difficult to take over the company. Tesla CEO Elon Musk has said he wants to buy the social-media platform and take it private, but the company has made it tough for him to amass more than a 15% stake in it.
The COVID-19 pandemic is also still hanging around, perhaps most obviously in China. The second-largest economy in the world grew at 4.8% annually in the first three months. Authorities ordered the shutdown of Shanghai and other areas to stop coronavirus outbreaks.
Stocks in Shanghai fell 0.5% and markets throughout Asia were relatively weak. Japan’s Nikkei 225 lost 1.1%, and South Korea’s Kospi dipped 0.1%.
Markets in Asia and Europe were closed during holidays.
Monday’s trading was reopened in some markets around the world. Attention was now shifted to Ukraine, where Ukrainian fighters fought against the capture of Mariupol, their city that had been under siege for seven weeks. They ignored a Russian surrender-or-die ultimatum.
The fall of Mariupol would mark Moscow’s greatest victory in the war and allow troops to participate in a potentially pivotal battle for control over Ukraine’s industrial east.
Ukraine sent top officials to Washington this week for the spring meetings of the International Monetary Fund (WB) amid dire warnings regarding the effects of Russia’s invasion on the global economic system.
A World Bank official stated Friday that the prime minister, finance minister, and governor of the central bank are all coming to Ukraine. Because the visit was not officially announced, the official spoke under oath.
The conflict has pushed prices for oil and other commodities sharply higher, compounding difficulties for policy makers trying to nurse along recoveries from the pandemic while also tamping down inflation that is at 40-year highs in many countries.
AP Business Writers Elaine Kurtenbach and Joe McDonald contributed.
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