Wall Street flat on concerns over inflation impact on profits

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(Businesshala) – US stock indexes were trading largely flat in a choppy session on Tuesday on concerns over the impact of rising inflation on earnings for the upcoming third quarter, while Tesla gained after record China-made vehicle sales.

FILE PHOTO: People are seen on Wall Street outside the New York Stock Exchange (NYSE) in New York City, US, March 19, 2021. REUTERS/Brendan McDermid

Eight of the 11 major S&P 500 sectors rose, led by defensive utilities, real estate and consumer staples stocks that investors love during economic uncertainty.

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The communications services sector declined 1.2%, while mega-cap growth names including Microsoft Corp., Apple Inc., Alphabet Inc. and Facebook Inc. were weighed the most on the S&P 500 and Nasdaq.

But Tesla added 1.8% when data showed the electric vehicle maker sold 56,006 China-made vehicles in September, the most since it began production in Shanghai nearly two years ago.

Higher oil prices coupled with supply chain disruptions have raised alarm bells for businesses and consumers in the wake of the companies’ quarterly report, which begins Wednesday with JPMorgan Chase & Co.

Shares of JPMorgan were down 0.4% after hitting record highs recently on the easing of banking sub-index.

“Given all the difficulties that companies are facing, this quarter is likely to have more negative surprises than previous quarters,” said Tom Martin, senior portfolio manager at Global Investments in Atlanta.

“We’ve done well here (year-to-date) so you can continue to back and forth in the markets, a lot of it will be push and pull between inflation expectations and potentially a lack of growth.”

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.

At 11:44 a.m., the Dow Jones Industrial Average was down 11.12 points, or 0.03%, at 34,484.94, the S&P 500 was down 3.26 points, or 0.07%, at 4,357.93 and the Nasdaq Composite was down 17.22 points, or 0.12%. , at 14,468.98.

Investors also await the release of minutes from Wednesday’s Federal Reserve meeting for clues on a taper timeline, while inflation and retail sales data will be scrutinized to gauge the pace of the economic recovery.

Fed Vice President Richard Clarida said the central bank has met its employment target of moving forward with reducing its bond purchase program.

Atlanta Fed President Rafael Bostic and Richmond Fed President Thomas Barkin are expected to speak at separate events later in the day.

Nike Inc. shares rose 0.8% after Goldman Sachs began coverage of the sportswear maker’s stock with a “buy” rating.

MGM Resorts International jumped 6.9% after Credit Suisse upgraded the US casino operator’s stock from “neutral” to “outperform.”

American Airlines added 0.6% after forecasting a lower-than-expected adjusted net loss for the third quarter.

Moving issues declined from a 1.72-to-1 ratio on the NYSE and 1.41-to-1 on the Nasdaq. The S&P index recorded eight new 52-week highs and 10 new lows, while the Nasdaq recorded 34 new highs and 68 new lows.

Reporting by Devik Jain, Shreyashi Sanyal in Bengaluru and Federica Urso in Gdansk; Editing by Saumyadeb Chakrabarty and Arun Koyyur

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