Wall Street ends lower, ahead of economic data, earnings

  • Major Banks Earnings, CPI Data Expected Later This Week
  • US Casino Operators Fall as Macau Closes Casinos
  • Market-leading growth stocks drag Nasdaq down
  • Indices down: Dow 0.52%, S&P 1.15%, Nasdaq 2.26%

NEW YORK, July 11 (Reuters) – US stocks lost ground Monday as a lack of catalysts caused market participants to cautiously embark on a weekend filled with crucial inflation data and the unofficial start of the second-quarter earnings season.

Market-leading growth stocks pushed all three major US stock indices into negative territory, with risk-off sentiment exacerbated by the Macau casino’s first shutdown in more than two years to contain the spread of COVID-19. read more

“It’s a nervous market,” said Rob Haworth, senior investment strategist at US Bank Wealth Management in Seattle. “It’s all about kicking off the earnings season and what inflation (data) tells us.”

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“We know inflation is driven by supply constraints, and China is a key factor,” Haworth added. “And (the shutdown of Macau) threw a cold blanket on the market this morning.”

Results from major banks, including JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, are expected to launch the second quarter of the reporting season later this week.

The S&P 500 Banking Index (.SPXBK) fell 1.0%.

Analysts expect sharp declines in year-over-year earnings as companies increase loan loss reserves, fueling fears of an impending recession. read more

Later in the week, a range of economic data — including consumer prices, retail sales and factory output — should provide a glimpse of how far inflation has peaked and the economy has cooled as the Federal Reserve moves closer to next week’s policy meeting, which is expected to culminate in the second consecutive 75 basis point rate hike.

“The market is trying to warn itself of that (CPI) imprint,” Haworth said. “We’re hoping for a slowdown, which will soften the Federal Reserve, but on the other hand, there are many reasons to believe inflation could remain high and the Fed will remain aggressive.”

The market currently expects the central bank to raise Fed futures rates by 75 basis points in its latest salvo against blazing hot inflation, a tactic that some fear could plunge an already cooling economy into recession.

The Dow Jones Industrial Average (.DJI) fell 164.31 points or 0.52% to 31,173.84, the S&P 500 (.SPX) lost 44.95 points or 1.15% to 3,854.43 and the Nasdaq Composite ( .IXIC) fell 262.71 points, or 2.26%, to 11,372.60.

Of the 11 major sectors in the S&P 500, communications services (.SPLRCL) suffered the largest percentage drop, while utilities (.SPLRCU) were the winners.

Before major banks launch their second-quarter earnings season in earnest on Thursday and Friday, PepsiCo and Delta Air Line (DAL.N) earnings are expected Tuesday and Wednesday, respectively.

On Friday, analysts saw total annual S&P earnings growth of 5.7% for the period from April to June, down from the 6.8% forecast at the start of the quarter, according to Refinitiv.

Twitter Inc (TWTR.N) fell 11.3% in the wake of Elon Musk saying he is ending his deal to buy the social media company. read more

Shares of US casino operators Las Vegas Sands (LVS.N), Wynn Resorts (WYNN.O) and Melco Resorts fell between 6.3% and 9.6% after Macau closed all casinos amid the worst COVID outbreak since the onset of the health crisis. read more

The broader S&P 1500 Hotel, Restaurant and Leisure Index (.SPCOMHRL) fell 1.5%.

The number of declining issues surpassed the advancing ones on the NYSE by a 2.41-to-1 ratio; on Nasdaq, a 2.81-to-1 ratio favored decliners.

The S&P 500 made two new 52-week highs and 30 new lows; the Nasdaq Composite recorded 20 new highs and 130 new lows.

Volume on US stock exchanges was 9.33 billion shares, compared to the average of 12.92 billion over the past 20 trading days.

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Reporting by Stephen Culp; additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy

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