US stocks waver as earnings reports for companies begin

The S&P 500 rose 0.1% as of 12:01 p.m. Eastern. The Dow Jones Industrial Average rose 84 points, or 0.3%, to 31,260 and the Nasdaq rose 0.1%.

Oil prices slumped 7.3% and weighed on energy stocks, which also checked gains elsewhere in the market. Hess fell 4.3%.

Banks and industrial companies gained ground. Bank of America rose 1.7% and General Electric rose 3.4%.

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.

Several big technology companies fell and checked gains elsewhere in the market. Pricey values for technology stocks tend to push the broader market higher or lower. Microsoft fell 2.8%.

Clothing company Gap fell 3.9% 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 2.92% from 2.98% late Monday. It remains below the two-year Treasury yield, which fell to 3.03%. 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.