The market’s top bulls pulled all three major U.S. stock indexes into negative territory, with the risk-off sentiment soured by the first shutdown of Macau’s casino 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 the start of earnings season and what the inflation (data) tells us. Sign up now for FREE unlimited access to Reuters.com Register “We know that inflation is affected by supply constraints and China is a major factor,” Haworth added. “And (the Macau shutdown) threw a cold blanket over the market this morning.” Results from major banks including JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co are expected to kick off the second-quarter reporting season later this week. The S&P 500 Banking Index (.SPXBK) fell 1.0%. Analysts expect sharp plunges in year-on-year profits as companies increase their loan loss reserves, fueling fears of an impending recession. read more Later in the week, a slew of economic data – including consumer prices, retail sales and factory output – should provide a glimpse of the extent to which inflation has peaked and the economy has cooled as the Federal Reserve approaches its policy meeting of next week. which is expected to result in the second consecutive rate hike of 75 basis points. “The market is trying to warn itself ahead of this (CPI) print,” Haworth said. “We’re hoping for a slowdown, which would put the Fed in a more accommodative stance, but on the other hand, there are many reasons to believe that inflation could remain high and the Fed will remain hawkish.” The market currently expects the central bank to raise the Fed funds futures rate by 75 basis points in its latest crackdown on tepid inflation, a tactic some fear could tip 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 IX 2 points, or 7.26%, to 11,372.60. Of the S&P 500’s 11 major sectors, communications services (.SPLRCL) suffered the biggest percentage declines, while utilities (.SPLRCU) led the gainers. Before major banks kick off their second-quarter earnings season on Thursday and Friday, results from PepsiCo and Delta Air Line ( DAL.N ) are expected on Tuesday and Wednesday, respectively. As of Friday, analysts saw S&P’s full-year earnings rising 5.7 percent for the April-June period, down from a forecast of 6.8 percent at the start of the quarter, according to Refinitiv. Twitter Inc ( TWTR.N ) fell 11.3 percent after Elon Musk said he was ending his deal to buy the social media company. read more Shares of U.S. casino companies Las Vegas Sands ( LVS.N ), Wynn Resorts ( WYNN.O ) and Melco Resorts fell between 6.3 percent and 9.6 percent after Macau closed all casinos to contain its worst outbreak COVID since the start of the health crisis. read more The broader S&P 1500 Hotel, Restaurant and Leisure (.SPCOMHRL) index fell 1.5%. Declining issues outnumbered advancing ones on the NYSE by a ratio of 2.41 to 1. On the Nasdaq, a ratio of 2.81 to 1 favored the bearers. The S&P 500 hit two new 52-week highs and 30 new lows. the Nasdaq Composite hit 20 new highs and 130 new lows. Volume on US exchanges was 9.33 billion shares, compared to an average of 12.92 billion over the past 20 trading days. Sign up now for FREE unlimited access to Reuters.com Register Report by Stephen Culp. additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru Editing by Marguerita Choy; Our Standards: The Thomson Reuters Trust Principles.
