Stocks End Lower On Inflation Worries
4:33 pm Tuesday, July 13th, 2021
Stocks edged lower Tuesday as investors weigh the latest quarterly earnings reports from big U.S. companies and concerns about inflation.
To be more specific, total CPI jumped 0.9% m/m in June (Briefing.com consensus +0.5%), leaving it up 5.4% yr/yr, yet the 10-yr yield is flat at 1.36%. JPMorgan Chase (JPM) and Goldman Sachs (GS) reported better-than-expected earnings reports, yet JPM and GS shares are trading lower.
The 10-yr yield touched 1.38% in the wake of the report, but the fact that it’s sitting unchanged at 1.36% and well below the 1.78% level it reached in March has thrown another wrench in the view that long-term rates have to go higher because of inflation. The competing narrative that inflation rates are in the process of peaking is winning out again.
Declining issues have a 2:1 advantage over advancing issues at the NYSE and Nasdaq, with value/cyclical/small-cap stocks representing a big chunk in that declining line.
The S&P 500 financials (-1.4%), materials (-0.8%), industrials (-0.7%), energy (-0.6%), and consumer discretionary (-0.2%) sectors are among today’s laggards. Conversely, the information technology sector (+1.1%) stands atop the leaderboard, joined by consumer staples (+0.4%) and communication services (+0.5%) in the green.
Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), and Alphabet (GOOG) were doing the heavy lifting and are each trading in record territory. These four stocks represent 20% of the S&P 500’s market capitalization.
Boeing (BA) was an influential laggard in the industrials sector, and Dow, after the company said it’s slowing production of the 787 Dreamliner to resolve an issue with the FAA. PepsiCo (PEP) stands out in the consumer staples sector following positive earnings results and upbeat guidance.
