Wall St ends choppy session lower on earnings jitters; financials down

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NEW YORK (Businesshala) – US stocks ended a choppy session on Monday as investors panicked ahead of the third-quarter earnings reporting season.

FILE PHOTO: A street sign is seen for Wall Street outside the New York Stock Exchange (NYSE) in New York City, New York, US July 19, 2021. Businesshala/Andrew Kelly

Supply chain problems and higher costs for energy and other things have raised concerns about earnings, JPMorgan Chase & Co.’s results began on Wednesday.

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The index reversed early gains later in the afternoon and added to losses just before the close. Shares of JPMorgan were down 2.1% and were among the biggest drags on the S&P 500, along with Amazon.com, falling 1.3%. The S&P Financial Index was down 1%, while communications services fell 1.5%.

“The market is a little cautious this earnings season,” said Tim Grisky, chief investment strategist at Inverness Counsel in New York. “Supply chain issues may have affected earnings more for many companies and some industries than others.”

While another period of strong US profit growth is forecast for Corporate America, earnings are turning out to be important for investors who are concerned about how supply disruptions and inflationary pressures will affect bottom lines.

This could lead to further volatility on Wall Street after the steep fall in September. According to IBES data from Refinitiv as of Friday, analysts expect S&P 500 companies’ profits to rise 29.6% year-over-year in the third quarter.

The Dow Jones Industrial Average fell 250.19 points, or 0.72%, to 34,496.06, the S&P 500 fell 30.15 points, or 0.69%, to 4,361.19, and the Nasdaq Composite fell 93.34 points, or 0.64%, to 14,486.20.

The energy sector also eased after reaching its first day’s high since January 2020. Higher oil prices have raised concerns about rising costs for businesses and consumers.

S&P 500 vs. Energy

Analysts expect some positive earnings news. “If you’re a large company, you’re able to mitigate a lot of these issues,” said Christopher Harvey, head of equity strategy at Wells Fargo Securities in New York.

Management “has been very conscious of its budget and is not sacrificing margins.” At the same time, demand remains strong, he said.

Visa Inc. was down 2.2% and Mastercard Inc. also fell 2.2% among the biggest drags on the S&P 500.

Volume on US exchanges stood at 8.15 billion shares, compared to an average of 10.9 billion for the full session over the past 20 trading days.

Trading may slow due to a US federal holiday on Monday, with US bond markets closed for the day.

Among individual stocks, Southwest Airlines Co. fell 4.2% on a report that it canceled at least 30% of scheduled flights on Sunday.

Additional reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Arun Koyur, Aditya Soni and David Gregorio

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