NEW YORK, July 14 — The S&P 500 and Nasdaq indexes fell in choppy trading today as investors digested a mixed bag of quarterly earnings reports from US lenders, with new business restrictions in California weighing on technology stocks.
Largest US lender JPMorgan Chase & Co rose 2.2 per cent as it posted a smaller-than-expected 51 per cent drop in second-quarter profit and set aside US$10.5 billion (RM44.8 billion) to cover potential bad loans.
However, Wells Fargo & Co tumbled 5.8 per cent after it posted a quarterly loss for the first time since the 2008 financial crisis. Citigroup Inc was also down 0.8 per cent as it reported a steep drop in quarterly profit.
The losses in bank shares pushed the S&P 500 banks index down 0.9 per cent.
“We’re clearly in for more volatility as earnings season is now beginning, and these increases in the virus in California, Texas, Tennessee and Florida are going to continue to keep people on edge,” said Randy Frederick, vice president of trading and derivatives at Charles Schwab in Austin, Texas.
Wall Street has reclaimed most of its coronavirus-driven losses since March as a raft of monetary and fiscal stimulus and improving economic data raised hopes of a swift post-pandemic recovery.
But a recent record surge in Covid-19 cases and new business restrictions, particularly in California, have sparked a selloff in tech stocks, with the Nasdaq pulling back from record highs.
Technology stocks shed another 1 per cent, leading losses among major S&P sectors.
Wall Street’s fear gauge rose for a second straight day to its highest in two weeks.
Investors are bracing for what could be the sharpest drop in quarterly earnings for S&P 500 firms since the 2008 financial crisis, according to Refinitiv IBES data.
“Expectations are so low that there’s a good chance there will be a decent set of earnings reports over the next two or three weeks,” said Christopher Grisanti, chief equity strategist at MAI Capital Management in Cleveland, Ohio.
Meanwhile, the United States on Monday rejected China’s disputed claims to offshore resources in most of the South China Sea. The Trump administration also plans to scrap a 2013 auditing agreement that could foreshadow a broader crackdown on US-listed Chinese firms.
At 10am ET, the Dow Jones Industrial Average was up 89.57 points, or 0.34 per cent, at 26,175.37, the S&P 500 was down 9.80 points, or 0.31 per cent, at 3,145.42. The Nasdaq Composite was down 98.43 points, or 0.95 per cent, at 10,292.41.
Delta Air Lines Inc fell 1.2 per cent as it warned it will be more than two years before the industry sees a sustainable recovery from the “staggering” impact of the coronavirus pandemic, with demand largely tracking the curve of infections in different places.
Data on Tuesday showed US consumer prices rebounded in June after three straight monthly declines, but the underlying trend suggested inflation would remain muted.
Declining issues outnumbered advancers for a 1.02-to-1 ratio on the NYSE and for a 1.50-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and no new low, while the Nasdaq recorded 18 new highs and 18 new lows. — Reuters
