Stocks Drift Lower With Focus On Earnings, Rates: Markets Wrap

US stocks drifted lower at the start of a week packed with corporate earnings reports and economic data that may help illuminate the path for interest rates.

The S&P 500 fell 0.1% while the Nasdaq 100 shed 0.5% following a muted end to trading last week. Shares of Bed Bath & Beyond Inc. declined on plans to shutter all its stores. Treasury yields fell and a gauge of the dollar was steady.

“The equity market last week struggled to pierce through the technical resistance at 4,200. It’s hard to predict whether this was a simple consolidation before a push higher, or the beginning of a roll over back to lower levels,” wrote Michael Purves, founder of Tallbacken Capital Advisors. “Momentum indicators are a bit unclear right now, though there are some yellow warning lights flashing.”

Swaps markets continue to see interest rates peaking in the coming weeks before a series of cuts later this year. US GDP data is forecast to reveal slowing growth, while the so-called core PCE deflator, the central bank’s preferred inflation gauge, is expected to show price growth cooled. Meanwhile, a busy week for earnings will include First Republic Bank on Monday, followed by tech majors Microsoft Corp., Meta Platforms Inc. and Amazon.com Inc.

“As we ready ourselves for earnings from big cap tech, among from hundreds others this week, it just seems so obvious to me why the stock market hangs in as well as it does,” Peter Boockvar, author of the Boock Report, wrote in a morning note. “No one wants to miss the ‘Fed is done’ rally.”

Still, not everyone holds this view. Leveraged investors boosted net short positions on 10-year Treasury futures to a record this month, data from the Commodity Futures Trading Commission show. That’s an indication they think the Federal Reserve will keep raising rates to tackle inflation.

In Europe, banks led gains, with UBS Group AG climbing after takeover target Credit Suisse AG reported outflows that were lower than some analysts had expected. The Stoxx Europe 600 fluctuated while the euro gained against the dollar.

Elsewhere, the new Bank of Japan Governor Kazuo Ueda will hold his first policy meeting this week, in which the bank may start its policy review of the past decades.

Key events this week:

• US new home sales, consumer confidence, Tuesday
• South Korea GDP, Tuesday
• Australia CPI, Wednesday
• Sweden rate decision, Wednesday
• Eurozone economic, consumer confidence, Thursday
• US initial jobless claims, GDP, Thursday
• Bank of Japan meets on interest rates, Friday
• Euro-area GDP, Friday
• US personal income, Friday

Earnings highlights:

• Tuesday: Pepsi, General Motors, General Electric, McDonalds, Microsoft, UBS, UPS
• Wednesday: Boeing, Meta, Hilton
• Thursday: Amazon, American Airlines, Intel, Mastercard, Southwest Airlines, Hershey, Honeywell, Barclays

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.1% as of 10:47 a.m. New York time
• The Nasdaq 100 fell 0.5%
• The Dow Jones Industrial Average was little changed
• The Stoxx Europe 600 was little changed
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro rose 0.4% to $1.1034
• The British pound rose 0.3% to $1.2465
• The Japanese yen fell 0.2% to 134.38 per dollar

Cryptocurrencies

• Bitcoin fell 0.5% to $27,358.04
• Ether was little changed at $1,849.65

Bonds

• The yield on 10-year Treasuries declined six basis points to 3.51%
• Germany’s 10-year yield was little changed at 2.49%
• Britain’s 10-year yield was little changed at 3.76%

Commodities

• West Texas Intermediate crude rose 0.8% to $78.52 a barrel
• Gold futures rose 0.3% to $1,996.90 an ounce

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