Stocks end unevenly after a day of listless trading
U.S. stock indexes capped a day of listless trading with a mixed finish Monday, as gains by banks and technology companies were largely offset by losses in other sectors.
Bond yields rose, pointing to a pickup in interest rates on consumer loans, which helped drive up bank stocks. Technology stocks posted solid gains, adding to the sector’s market-leading showing this year. Alphabet, Google’s parent company, surged in after-market trading after it reported its latest quarterly results.
The day’s gains were mostly overshadowed by losses in industrial companies, consumer goods companies and energy firms, among other sectors.
Stocks mostly drifted in a narrow range for much of the day as investors sized up corporate quarterly results. It’s the busiest week in the reporting season.
“Earnings are coming in better than expected, but you’re not getting much of a reaction from the marketplace,” said Tom Martin, senior portfolio manager of Globalt Investments. “People are biding their time.”
The Standard & Poor’s 500 index rose 5.15 points, or 0.2%, to 2,806.98. The Dow Jones industrial average edged down 13.83 points, or 0.1%, to 25,044.29. The Nasdaq rose 21.67 points, or 0.3%, to 7,841.87. The Russell 2000 index of smaller-company stocks ticked up 1.61 points, or 0.1%, to 1,698.41.
The indexes are on pace to finish the month with gains. The S&P 500, the market’s benchmark index, has risen each of the last three weeks.
Bond prices fell. The yield on the 10-year Treasury rose to 2.96% from Friday’s 2.89%. The increase in bond yields helped lift bank shares. Interest rates on mortgages and other consumer loans tend to move in tandem with bond yields, so rising rates can translate into bigger profits for banks. Wells Fargo shares climbed 2.8% to $58.
A third of the companies in the S&P 500 are set to report second-quarter earnings this week. So far, corporate earnings have been generally better than expected, reinforcing the underlying perception in financial markets that the U.S. economy is performing strongly and that the Federal Reserve will raise interest rates next month.
“The thing that’s been actually driving the earnings beats right now is just the fundamental performance of the companies,” said Jason Pride, chief investment officer Glenmede’s Private Wealth business. “It’s a good business environment.”
Of the roughly 20% of companies in the S&P 500 that have reported quarterly results so far, 83% have turned in earnings that beat Wall Street’s expectations, Pride said, noting that company earnings growth so far is running 21% higher than in the same quarter last year.
Even so, investors have been expecting companies to outdo analysts’ expectations, which is one reason not all stocks are seeing a big bump from earnings growth.
“Companies that are coming in a penny or two ahead of expectations, they’re basically not getting much of a reward in their stock,” Pride said. “That indicates the market is expecting these sorts of beats against earnings.”
Among the companies due to report results this week are Boeing, Facebook, Amazon.com and McDonald’s.
Hasbro shares jumped Monday after the toymaker posted earnings that beat Wall Street’s forecasts. The company was the biggest gainer in the S&P 500, leaping 12.9% to $106.04. Rival toymaker Mattel also got a boost, climbing 3.9% to $16.59.
Illinois Tool Works tumbled 7.2% to $136.26 after the manufacturer of industrial products and equipment forecast earnings that were well below what analysts expected. The company led a sell-off in industrial sector stocks.
Fiat Chrysler Automobiles slid 1.8% to $18.98 on news that Chief Executive Sergio Marchionne has been replaced unexpectedly due to complications from shoulder surgery he had last month. On Saturday, the FCA board named longtime Jeep executive Mike Manley as CEO, accelerating a transition that was planned for early next year. Boards also named replacements for Marchionne as Ferrari CEO and CNH Industrial chairman. Ferrari fell 2.5% to $136.49. CNH Industrial fell 1.6% to $10.11.
Tesla slid 3.3% to $303.20 after the Wall Street Journal reported that the maker of electric cars has asked some of its suppliers to refund a portion of what it has already spent. The plea raised questions about Tesla’s cash position, which has dwindled after some production issues.
Papa John’s sank 9.7% to $46.56 after the pizza delivery company adopted a shareholder rights plan to keep founder John Schnatter from buying a majority stake. The company is struggling to distance itself from Schnatter, who resigned as chairman this month after his use of a racial slur during a media training session was revealed. Schnatter has since called his resignation a “mistake” and criticized the company’s handling of the incident.
Oil prices fell, erasing gains from earlier in the day. Benchmark U.S. crude fell 37 cents to $67.89 a barrel in New York. Brent crude, used to price international oils, slipped a penny to $73.06 a barrel in London.
Halliburton was the biggest decliner in the S&P 500, sliding 8.1% to $41.54 after it said that some customers are pulling back on production because of bottlenecks in getting the oil and gas they’re producing to market.
The dollar slipped to 111.48 yen from 111.52 yen. The euro weakened to $1.1689 from $1.1726.
Gold declined $5.50 to $1,225.60 an ounce. Silver fell 12 cents to $15.43 an ounce. Copper fell 1 cent to $2.75 a pound.
Heating oil rose 1 cent to $2.12 a gallon. Wholesale gasoline rose 2 cents to $2.09 a gallon. Natural gas fell 4 cents to $2.72 per 1,000 cubic feet.
In Europe, Germany’s DAX slipped 0.1%, the CAC 40 in France fell 0.4%, and the FTSE 100 index of leading British shares declined 0.3%. Japan’s Nikkei 225 tumbled 1.3%. South Korea’s Kospi dropped 0.9%. Hong Kong’s Hang Seng edged up 0.1%.
UPDATES:
2:35 p.m.: This article was updated with closing prices, context and analyst comment.
12:30 p.m.: This article was updated with more recent prices, context and analyst comment.
This article was originally published at 7 a.m.
