Traders work on the floor at the New York Stock Exchange in New York, Aug. 10, 2022. (AP Photo/Seth Wenig, File)
By Damian J. Troise and Stan Choe
U.S. stocks were mixed Monday at the start of a week with a few events that could shake markets, including updates on inflation and the health of corporate profits.
The S&P 500 dipped 0.1% after surrendering an early gain of 1.4% in its first trading after closing out its first winning week in the last five. The Dow Jones Industrial Average dipped nearly 113 points, or 0.3%, while the Nasdaq composite gained 0.6%.
More stocks rose than fell, and Wall Street's largely positive start to 2023 has come on hopes the Federal Reserve could ease up on its economy-shaking hikes to interest rates as inflation cools. Such rate increases have already slowed parts of the economy sharply, and the fear is more big hikes could cause a painful recession.
Treasury yields fell further Monday as traders adjust bets for what the Fed will do. They dropped Friday after data showed workers are winning weaker raises than in earlier months. While that's discouraging for workers whose pay is still failing to keep up with rising bills, it could ultimately mean less upward pressure on inflation.
The next big marker for the market will be Thursday's report on inflation at the consumer level. Economists expect it to show inflation slowed further to 6.5% last month from 7.1% in November.
The yield on the two-year Treasury, which tends to track expectations for Fed action, fell to 4.19% from 4.26% late Friday and more than 4.70% in November. The yield on the 10-year Treasury, which helps set rates for mortgages and other important loans, fell to 3.52% from 3.57% late Friday.
Lower rates tend to help high-growth and technology stocks in particular, and they were some of the market's leaders Monday.
Tesla added 5.9%, Nvidia rose 5.2% and Advanced Micro Device climbed 5.1% for some of the biggest gains in the S&P 500. Slightly more stocks in the index rose than fell.
Altogether, the S&P 500 slipped 2.99 points to 3,982.09. The Dow fell 112.96 to 33,517.65, and the Nasdaq rose 66.36 to 10,635.65.
Analysts, though, warn more bumpiness is almost surely on the way for the stock market. Even if inflation is slowing, the Fed has pledged to hike rates still further and then to hold them at a high level for a while to make sure the job is done on inflation.
And parts of the economy that do best when rates are low have already shown signs of sharp pain as the Federal Reserve has hiked its key overnight rate to a range of 4.25% to 4.50% from roughly zero a year ago.
Warnings are also coming for what look to be lackluster earnings reports from companies, which are contending with higher labor costs and other expenses that eat into their profits. Earnings reporting season is set to kick off on Friday, and this may mark the first year-over-year drop in earnings per share for S&P 500 companies since 2020.
“With 2022 behind us, investors are now primarily focused on the profit outlook for the coming year,” strategists at Goldman Sachs wrote in a report.
For the full year of 2023, they see zero growth for S&P 500 earnings per share. And that's if the economy avoids a recession. If a recession does hit, as many on Wall Street suspect, they say earnings could fall 11%. That's key because profits are one of the main levers that set stock prices.
Some retailers fell Monday after giving financial updates on sales and profitability that disappointed investors. Macy’s dropped 7.7%, and Lululemon Athletica fell 9.3%.
Stock markets in Europe and Asia gained ground. A Chinese financial news outlet cited a top central bank official as saying that China's more than two-year crackdown on internet companies is nearly finished.
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AP Business Writers Elaine Kurtenbach and Matt Ott contributed to this report.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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