Wall St mixed in start to busy week for earnings, data
(Reuters) -The S&P 500 and the Dow inched higher in choppy trading on Monday as investors braced for a week packed with key economic data and earnings from some of Wall Street's biggest companies, while U.S. trade policy developments remained in focus.
Investors were watching company earnings and executive comments for indications on how U.S. President Donald Trump's new tariffs could impact their outlook.
The spotlight will be on "Magnificent Seven" megacaps including Apple and Meta Platforms as 180 S&P 500 companies prepare to report results this week.
Big tech companies can continue to beat earnings expectations as they are more resistant to tariffs, said Phil Blancato, CEO of Ladenburg Thalmann Asset Management.
"Are you going to tell somebody to not use a Microsoft operating system at this point because of a tariff? That's highly unlikely."
So far, earnings season has been somewhat upbeat, with S&P 500 earnings now expected to climb 9.7% in the first quarter from a year ago, according to LSEG IBES.
At 09:40 a.m. ET, the Dow Jones Industrial Average rose 242.03 points, or 0.60%, to 40,355.53, the S&P 500 gained 10.25 points, or 0.19%, to 5,535.46 and the Nasdaq Composite lost 18.67 points, or 0.11%, to 17,364.27.
The S&P 500 and the Nasdaq were trading at their highest levels since April 2.
Gains in Boeing after Bernstein's rating upgrade lifted the Dow, while a decline of 2% in Nvidia weighed on the Nasdaq.
A report said China's Huawei Technologies was preparing to test its artificial-intelligence processor, hoping to replace some of Nvidia's products.
Many companies have flagged the uncertainty caused by changes in the U.S. administration's trade policy, with some cutting or pulling annual forecasts.
Signs that the U.S. and China could be willing to de-escalate trade tensions had injected some optimism in markets last week, with the three main indexes ending Friday with weekly gains, while the small-cap Russell 2000 marked its best week since November.
However, competing claims on the state of negotiations from Beijing and Trump kept uncertainty elevated.
"The market really just continues in this game of trying to figure out what's next for President Trump and trade negotiations," said Blancato.
Crucial economic data, including the monthly U.S. payrolls data and the personal consumption expenditures price index, is also on the roster.
The S&P 500 has declined more than 4% since the presidential elections in November, and fallen around 10% from its February record high as markets assess the potential impact of tariffs.
A majority of economists polled by Reuters said the risks of the global economy slipping into recession this year were high.
Web browser developer Opera's U.S.-listed shares jumped 8.6% after the company lifted its annual revenue forecast.
Spirit AeroSystems rose 2.7% after Airbus reached a deal to take over some of the company's plants.
Advancing issues outnumbered decliners by a 2.24-to-1 ratio on the NYSE and by a 1.68-to-1 ratio on the Nasdaq.
The S&P 500 posted 3 new 52-week highs and no new lows while the Nasdaq Composite recorded 19 new highs and 12 new lows.
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The market has largely viewed the latest overnight release of the Consumer Price Index (CPI) inflation report in a positive light. The nominal CPI rose by 2.7% year-on-year, slightly below the expected 2.8%. The report also indicated stronger-than-expected inflation in service, while goods inflation came in lower than anticipated. These figures have reinforced market expectations for a rate cut and boosted the performance of U.S. stocks overnight. Specifically: All three major U.S. stock indices rose by more than 1% overnight, with the S&P 500 and the tech-heavy Nasdaq Composite both closing at record highs. According to CME FedWatch, the market's probability of a 25-basis-point rate cut by the Federal Reserve in September has increased from 85.86% the previous day to 94.93%. Although the market widely expects a rate cut in September, the focus among those supporting the move varies. Some are paying attention to inflation trends, while others are closely monitoring employment data. First, regarding the impact of Trump's tariff policies on inflation, expert opinions are divided. One camp argues that the effect of tariffs on U.S. inflation is actually quite limited. "Now you have six months of evidence, I don't really think tariffs cause inflation. Taxes don't cause inflation. And so what you're seeing in the data is very muted effects that are one time increases in the price level." It's worth noting that James Bullard is currently considered a top candidate for the next Federal Reserve Chair. In an interview with CNBC overnight, he also stated that he expects the Fed to cut rates by a total of 100 basis points over the next year. Meanwhile, another camp in the market warns that the impact of tariffs on inflation may gradually become more apparent in the future. Experts caution that, in addition to nominal CPI, it's crucial to monitor the trajectory of core CPI. "We are seeing a little bit of an uptick in the sequential core inflation and underlying inflation data. And I think a large part of that is the moderate impact we're seeing of tariff pass through that that is likely to grow in the months ahead." Additional analysis points out that while businesses may absorb costs in the short term, they will ultimately pass them on to consumers, particularly in industries with already narrow profit margins. "For instance, groceries, I mean, there's very little margin there. They're going to, you know, your tomato prices are going to go up because of because they can't really absorb, you know, those prices. It's just a matter of time that this, that the tariff related inflation starts to show up in the data." Finally, it's noteworthy that no consensus has yet been reached within the Federal Reserve regarding the pace of future rate cuts. Currently among Fed officials, Michelle Bowman and Christopher Waller represent the dovish camp advocating for . However, Jeffrey Schmid, President of the Kansas City Fed struck a hawkish tone overnight, arguing for . With moderate voices further complicating the divide, analysts suggest that even if the Fed initiates a cut in September, the pace may remain measured due to persistent internal disagreements.
