NEW YORK, July 13 — The Nasdaq index reversed early declines to hit a record high today, helped by a rise in growth-linked megacap stocks and as earnings season kicked off on a positive note, while a solid rise in consumer prices in June weighed on sentiment.
A Labour Department report showed US consumer prices rose by the most in 13 years last month amid supply constraints and a continued rebound in costs of travel-related services, while the so-called core CPI surged 4.5 per cent on a year-on-year basis, the largest rise since November 1991, after rising 3.8 per cent in May.
“The headline CPI numbers have shock value, for sure,” said Jamie Cox, managing partner for Harris Financial Group in Richmond, Virginia.
“However, once you realize that a third of the increase is used car prices, the transitory picture becomes clearer… inflation is rising, but things are well behaved and have not changed materially.”
Inflation and positive economic data have dictated Wall Street’s movement since mid-June as investors fear an overheating economy amid a faster reopening could force the Federal Reserve to pare back its ultra-loose monetary policies sooner than expected.
Nine of the 11 major S&P 500 sector indexes were trading lower, with the defensive real estate and utilities sectors leading declines.
Big banks including JPMorgan Chase & Co and Goldman Sachs Group Inc reported higher-than-expected quarterly earnings. Shares of Goldman Sachs dipped 0.4 per cent, while JPMorgan slipped 0.7 per cent as it suffered from a well-flagged slowdown from last year’s record-breaking trading results.
The S&P 500 banks index fell 0.8 per cent, while the financials index dropped 0.5 per cent.
PepsiCo Inc gained 1.8 per cent after raising its full-year earnings forecast, betting on accelerating demand for its sodas in theatres, restaurants and stadiums as Covid-19 restrictions continue easing.
“When you look at the results, these banks have had some blowout numbers,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“I think further and further into the earnings season, if we keep getting good results like what we saw for the first quarter then it will provide a cushion for the market.”
June-quarter earnings per share for S&P 500 companies are expected to rise 66 per cent, according to Refinitiv data, with market participants questioning how long Wall Street’s rally would last after a nearly 16.7 per cent rise in the benchmark index so far this year.
The S&P 500 technology sector rose 0.3 per cent, with a boost from heavyweights including Apple Inc and Microsoft Corp.
At 10.12am ET, the Dow Jones Industrial Average was down 50.34 points, or 0.14 per cent, at 34,945.84, the S&P 500 was down 1.57 points, or 0.04 per cent, at 4,383.06, and the Nasdaq Composite was up 17.86 points, or 0.12 per cent, at 14,751.10.
Boeing Co fell 3.0 per cent after the Federal Aviation Administration said late yesterday some undelivered 787 Dreamliners have a new manufacturing quality issue.
Conagra Brands Inc slipped 3.9 per cent after the packaged foods company lowered its full-year profit and margin forecasts.
Declining issues outnumbered advancers for a 2.15-to-1 ratio on the NYSE and for a 2.74-to-1 ratio on the Nasdaq.
The S&P index recorded 25 new 52-week highs and no new low, while the Nasdaq recorded 33 new highs and 23 new lows. — Reuters