On Monday, the S&P 500 kept seesawing for most of the trading session and then ended the day almost unchanged. This was because investors were preparing for an interest rate increase at a meeting of the US Federal Reserve this week and earnings reports from a number of growth companies.
The Nasdaq closed the day lower, while the S&P 500 held steady, and consumer discretionary and technology were the stocks that were leading the declines. Gains were recorded in the energy sector, thanks to a rise in prices.
Market analysts said that the market was currently in a holding pattern and was waiting for all the developments to take place. On Wednesday, the Fed’s two-day monetary policy meeting will come to an end. The US central bank is expected to announce a hike in the interest rate by three-quarters of a percentage point, thereby ending the support introduced in the pandemic era.
The most important thing will be the comments from Jerome Powell, the chairman of the Fed, after the announcement, as some investors are worried that the aggressive rate increases could drive the economy into recession.
There was a 0.28% rise in the Dow Jones Industrial Average of 90.75 points, which took it to 31,990.04. A 0.13% gain or that of 5.21 points was recorded in the S&P 500 which took it to 3,966.84 points. The Nasdaq Composite fell by 0.43% or 51.45 points to end at 11,782.67.
In terms of the second-quarter reporting period, this week is expected to be a rather busy one because there are almost 170 S&P 500 companies that are due to post their results. On Tuesday, Google’s parent Alphabet Inc. and Microsoft Corp. are expected to report, while Thursday will see Amazon.com Inc. and Apple Inc. post their results.
Market analysts said that the week was a crucial one for the market in terms of earnings season, particularly for the tech-heavy Nasdaq, which had climbed in the previous week. The index has declined this year like other sectors but had managed to record gains of more than 3% in the previous week.
After the trading session ended, there was a more than 8% drop in Walmart shares, as the retailer cited fuel and food inflation for cutting its full-year profit forecast. It is expected that earnings of S&P 500 companies to have increased by 6.1% in the second quarter, as compared to last year.
Other than the rising interest rates and inflation, investors have also been worried about the impact of lingering supply chain issues and currency headwinds on companies in the current earnings season. Reports on two housing indicators will be presented on Tuesday, which is the number of new home sales by the Commerce Department and Shiller’s 20-city composite.
According to recent housing data, this sector could show indications of a cool-down in the economy. A 13.2% drop was also recorded in Newmont Corp shares after the miner missed its forecast for second-quarter profits and raised its annual cost forecast.