NEW YORK (AP) — Wall Street was adrift Monday after a third straight week of losses.
The S&P 500 rose 0.1% in midday trading after giving up most of its modest gains. As of 11:25 a.m. ET, the Dow Jones Industrial Average was up 17 points, or less than 0.1%, and the Nasdaq Composite was up 0.1%.
Trust Financial rose 2.3% in one of the biggest gains in the market after reporting year-to-date profits that beat analysts’ expectations.
Zions Bancorp also rose after receiving stronger-than-expected press coverage. Analysts called the company’s performance solid, and its stock rose 2.4%, reversing some of last year’s plunge on concerns about the strength of the large regional banking industry.
That helped offset a 5% decline in Tesla Inc., which announced further price cuts over the weekend. Elon Musk’s electric car company, whose stock has already fallen more than 40% this year, is scheduled to report first-quarter results on Tuesday.
It’s typically a big week for earnings reports, with about 30% of S&P 500 companies scheduled to report earnings for the first three months of the year. That includes several companies that have surpassed Tesla and become known as members of the Magnificent Seven. This handful of companies accounted for most of the S&P 500’s huge gains last year, raising the bar for expectations to justify stock prices.
Analysts believe that earnings per share growth for the group of seven stocks as a whole has slowed to 39% from 63% at the end of last year, according to Bank of America strategists. This past quarter may have also been the trough of declining profits among the other 493 companies included in the index. The growth gap between them and the Magnificent Seven should narrow by the end of the year, strategists Oson Kwon and Savita Subramanian said in a BofA Global Research Report.
Verizon Communications opened this week’s report by disclosing a decline in profits that was not as severe as analysts expected. It cited price increases and other measures to support profits.
Verizon stock fell 4% after an early rise after the company announced lower-than-expected first-quarter sales and left its full-year profit forecast unchanged.
Companies as a whole are under even more pressure than usual to achieve greater profits and revenues. This is because interest rates, another major factor determining stock prices, are unlikely to be of much use in the short term.
Federal Reserve officials warned last week that the Fed may need to keep interest rates high for some time to ensure high inflation falls to its 2% target. This was a big disappointment for financial markets, dashing expectations that had been building since the Fed earlier indicated there could be three rate cuts this year.
A cut in interest rates had long appeared imminent after inflation cooled sharply last year. But a series of reports showing that inflation has remained higher than expected this year have raised concerns that progress could stall.
Most traders now expect only one or two rate cuts this year, according to data from CME Group, down from forecasts of more than six rate cuts at the start of the year. They are also betting on the possibility of no interest rate cuts this year.
Concerns about “sticky” inflation are among the reasons Stifel strategists urge caution.
Stocks generally look expensive, in part due to Wall Street’s enthusiasm for anything related to artificial intelligence technology. While some analysts have suggested that stocks could continue to rise as enthusiasm for AI continues to grow, Stifel’s Barry Bannister and Thomas Carroll believe that Bitcoin It points to signs of “an end to the speculative frenzy” in the tech industry, including a possible all-time high in prices. They suggest that caution is needed until the third quarter of this year, which runs from July to September.
Bitcoin is still below its all-time high reached a month ago, but it rose on Monday.
In the bond market, the yield on the 10-year U.S. Treasury note fell slightly to 4.62% from 4.63% late Friday. The two-year Treasury yield, which has moved more in line with expectations from the Fed, fell to 4.96% from 4.99%.
In overseas markets, Hong Kong stock prices rose 1.8% after the People’s Bank of China kept the one-year and five-year loan prime rates unchanged, but stocks in Shanghai fell 0.7%. Analysts say the People’s Bank of China is assessing whether more stimulus is needed after the economy expanded faster than expected in the first three months of this year.
The rest of Asia and most of Europe had higher indexes.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
