Traders on the floor of the NYSE, July 6, 2022.
Source: NYSE
U.S. equities wavered on Monday, as traders braced for the busiest week of corporate earnings, as well as insights into further interest rate hikes from the Federal Reserve.
The Dow Jones Industrial Average was little changed, while the S&P 500 fell 0.2% and the Nasdaq Composite dropped 0.7%, after opening higher. All three of the indexes are on track for their best month of the year.
Monday kicks off the final week of trading for the month of July — and perhaps the most important week of the summer — with the Fed meeting and GDP data on deck. Almost a third of the S&P 500 are set to report quarterly earnings this week as well, including Apple, Alphabet and Microsoft. Investors are still worried about the potential of an economic recession and are hoping this week’s news storm will help direct their expectations.
“Investors likely believe Thursday’s GDP report will show a second quarter of decline, which is the unofficial signal of recession,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC on Monday. “While the Fed will probably announce a 75-basis-point rate hike on Wednesday, they will offer a more moderate tone towards further rate increases. We see this counter-trend rally continuing in the near term.”
Shares of Newmont Corporation slid 12% after the mining company reported a quarterly loss that was down nearly 41% from a year ago, hurt by a drop in gold prices.
Philips tumbled 6% after the Dutch medical equipment maker reported weaker-than-expected quarterly earnings, citing lockdowns in China and supply chain issues.
On the flip side, energy stocks were on the move higher as oil prices rose. Diamondback Energy, Marathon Oil and APA Corp each jumped about 6%. Chevron was the top gainer in the Dow, up 2.7%.
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On Friday, the major averages fell on the back of weaker-than-expected earnings from Snap that sent tech shares tumbling. Still, all three benchmarks closed the week higher, with the Dow up 2%. The S&P 500 advanced about 2.6%, and the Nasdaq capped the week up 3.3%.
It was the second positive week in the last three for the major averages. The S&P 500 has been attempting a comeback after falling into a bear market earlier this year. The index is currently up more than 8% from its 2022 and trading near the highest levels since early June.
Investors shifted into risk assets last week after absorbing some strong corporate results that had Wall Street deliberating whether the bear market has found a bottom.
“We believe investors became too bearish in June about both the economy and corporate earnings. Earnings season is likely to continue to be a positive catalyst for stocks with some exceptions like Snap, which caused a pull back on Friday,” Infrastructure Capital Advisors CEO Jay Hatfield said.
