THE S&P 500 and Nasdaq ended lower on Tuesday after hitting record highs earlier in the session, with investors digesting a jump in consumer prices in June and earnings from JPMorgan and Goldman Sachs that kicked off the quarterly reporting season.
The S&P 500 and Nasdaq reached fresh record highs but quickly fell into negative territory after an auction of 30-year Treasuries showed less demand than some investors expected and pushed yields higher.
The Dow Jones Industrial Average fell 0.31% to end at 34,888.79 points while the S&P 500 lost 0.35% to 4,369.21. The Nasdaq Composite dropped 0.38% to 14,677.65.
Data indicated US consumer prices rose by the most in 13 years last month, while so-called core consumer prices surged 4.5% year over year, the largest rise since November 1991.
Economists viewed the price surge, driven by travel-rated services and used automobiles, as mostly temporary, aligning with Federal Reserve Chair Jerome Powell’s long-standing views.
“Any time you get an uptick in interest rates the stock market is going to get nervous, especially on a day like today,” said New Jersey’s Themis Trading co-manager of trading Joe Saluzzi.
The S&P 500 growth index dipped 0.05% while the value index fell 0.70%.
“With growth outperforming value, the takeaway is clearly that inflation from a market perspective is not a real threat in the long term,” said Georgia’s GLOBALT Investments portfolio manager Keith Buchanan.
Ten of the 11 major S&P 500 sector indexes ended lower, with real estate, consumer discretionary and financials each down more than 1%.
JPMorgan Chase & Co stock fell 1.5% after the company reported blockbuster quarterly profit growth but warned that the sunny outlook would not make for blockbuster revenues in the short term due to low interest rates.
Goldman Sachs Group Inc dipped 1.2% after its quarterly earnings exceeded forecasts.
Citigroup, Wells Fargo & Co and Bank of America were due to report their quarterly results early on Wednesday.
June-quarter earnings per share for S&P 500 companies are expected to rise 66%, according to Refinitiv data, with investors questioning how long Wall Street’s rally would last after a 16% rise in the benchmark index so far this year.
All eyes now turn to Fed Chair Jerome Powell’s congressional testimony on Wednesday and Thursday for his comments about rising price pressures and monetary support going forward. – July 14, 2021
