Banks led a broad slide in U.S. stocks Monday as an early rally faded, giving the benchmark Standard & Poor’s 500 index its fourth loss in a row.
Healthcare and energy stocks also helped pull down the market, outweighing gains by technology and consumer-focused stocks. Crude oil prices eked out a small gain after spending most of the day in the red.
The latest losses came as traders geared up for a busy week of company earnings reports that should help answer how corporate America is coping with rising interest rates, inflation and the effects of global trade disputes.
“The earnings results have the potential to stabilize the market, but what investors are really keen on hearing from companies is what the sustainability of the earnings outlook is, especially in light of the concerns of the potential impact from tariffs,” said Laura Kane, head of Investment Themes Americas at UBS Wealth Management Research.
The S&P 500 fell 11.90 points, or 0.4%, to 2,755.88. The index is on track for its worst month in more than three years. The Dow Jones industrial average fell 126.93 points, or 0.5%, to 25,317.41. The tech-heavy Nasdaq recovered from an early tumble, ending the day with a gain of 19.60 points, or 0.3%, at 7,468.63.
The Russell 2000 index of smaller-company stocks fell 2.54 points, or 0.2%, to 1,539.50 — its the lowest close since April. The index is now up just 0.3% for the year.
Decliners outnumbered gainers on the New York Stock Exchange.
Major U.S. stock indexes initially headed higher early Monday, riding a strong wave of buying in Chinese markets as traders brushed off potential concerns about slower growth in the world's second-biggest economy and a downgrade in Italy's credit rating.
That early rally vanished after a few minutes, however, as trading turned volatile. At its extremes, the Dow swung from a gain of more than 100 points to a loss of more than 200.
“In this pullback, the defensive sectors have held in there better than these more cyclical sectors,” said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute.
Investors have been worried in recent weeks about potential threats to corporate growth, including rising interest rates, the U.S.-China trade war and some sluggish reports about housing construction and sales.
This week marks the busiest stretch of the quarterly earnings calendar as many big-name companies report their latest results, including Caterpillar, Amazon and Alphabet, Google's parent company.
Nearly 17% of companies in the S&P 500 had served up third-quarter results as of Monday. Of those, 54% delivered earnings and revenue that topped Wall Street's forecasts, according to S&P Global Market Intelligence.
Financial and industrial companies account for most of the S&P 500 companies that have reported results so far this earnings season.
Investors are most focused on what companies have to say about any effects the U.S.-China trade war, a stronger dollar and rising interest rates are likely to have in 2019.
“Everybody's trying to get a fix on what 2019 earnings are going to be, because they're sure as heck not going to be what earnings growth was this year,” Wren said. “You're not going to have a big tax-induced sugar high like you're having this year,” he said, referring to the effects of the corporate tax cut championed by President Trump and passed by the GOP.
So far, most companies have said that they expect minimal effect from the hundreds of billions in tariffs that the United States and China have imposed on each other’s goods, “though some have taken a more negative tone about what lies ahead,” said a research note published Monday by RBC Capital Markets.
The key concerns cited by companies that issued quarterly results so far this earnings season include higher labor costs and the prices of commodities, transportation and shipping.
Banks and other financial companies took the heaviest losses Monday. Synchrony Financial shares slid 6% to $29.47.
Energy stocks fell as the price of crude oil spent most of the day lower. Newfield Exploration declined 3% to $22.91.
After a sluggish start, technology stocks rebounded. Advanced Micro Devices climbed 5.8% to $25.03.
Hasbro slid 3.1% to $95.01 after the toy maker reported disappointing third-quarter results, partly due to lost sales following the demise of Toys R Us. Hasbro also said it will cut jobs as it deals with the effects of Toys R Us’ bankruptcy. Rival toy maker Mattel slipped 0.8% to $14.10.
Traders hammered Bristol-Myers Squibb after the drugmaker said regulators want three more months to review data from a potential lung cancer treatment regimen. The stock skidded 6.3% to $50.88.
Fiat Chrysler Automobiles ticked up 3.7% to $16.09 after the automaker agreed to sell its components business, Magneti Marelli, to Japan's Calsonic Kansei for about $7 billion.
Bond prices didn't move much. The yield on the 10-year Treasury held steady at 3.19%.
Benchmark U.S. crude recovered from an early skid. It settled with a gain of 0.1% at $69.17 a barrel in New York. Brent crude, used to price international oils, rose 0.1% to $79.83 a barrel in London.
Wholesale gasoline fell 0.4% to $1.91 a gallon. Heating oil rose 0.7% to $2.32 a gallon. Natural gas slid 3.4% to $3.14 per 1,000 cubic feet.
Gold fell 0.3% to $1,224.60 an ounce. Silver fell 0.4% to $14.59 an ounce. Copper rose 0.3% to $2.79 a pound.