Wall Street Lower As Focus Shifts To Earnings

U.S. stock indexes fell on Monday, with the earnings season set to kick off in earnest this week amid concerns of weaker corporate profit due to the impact of surging inflation.

Jitters about the spread of COVID-19 in Macau hammered shares of casino operators as the gambling hub shut all its casinos for the first time in more than two years.

Las Vegas Sands Corp, Wynn Resorts Ltd and Melco Resorts & Entertainment Ltd were down between 9.6% and 13% and drove a 1.4% fall in the S&P 1500 Hotels Restaurant and Leisure index.

Wall Street has been trying to steady itself after reeling from the impact of a brutal selloff in the first half of the year. However, traders are fearing that another rout may be around the corner if company results fall short of expectations this month.

JPMorgan Chase & Co, Citigroup Inc, Morgan Stanley and Wells Fargo & Co are set to report their earnings this week and may give an insight into how corporate America is coping with inflation and rate hikes.

The S&P 500 banks index was down 1.1% on worries that an increase in loan loss reserves and a decline in M&A activity could hurt second-quarter profits at big U.S. banks.

"There's some nervousness about where we are heading into earnings," said Keith Buchanan, senior portfolio manager at GLOBALT Investments in Atlanta.

"The question that markets are grappling with is could we already be in a recession? And this earnings season should help give us more understanding as to what the second half of this year and what 2023 would look like in terms of a recession or no recession."

Focus will also be on U.S. consumer prices data later this week to gauge the state of inflation and how aggressively the Federal Reserve could respond.

The market is largely pricing in a 75-basis-point rate increase later in July, although concerns about the pace of future hikes have grown after a stronger-than-expected jobs report on Friday.

At 12:34 p.m. ET, the Dow Jones Industrial Average was down 114.49 points, or 0.37%, at 31,223.66 and the S&P 500 was down 39.89 points, or 1.02%, at 3,859.49.

The Nasdaq Composite was down 225.61 points, or 1.94%, at 11,409.70 as sharp declines in heavyweights Apple Inc, Microsoft Corp and Amazon.com Inc put it on course to snap its five-day winning streak.

Shares of Twitter Inc fell 8.6% after Elon Musk said on Friday he was terminating his deal to buy the social media company.

Declining issues outnumbered advancers for a 3.01-to-1 ratio on the NYSE and a 3.34-to-1 ratio on the Nasdaq. The S&P index recorded two new 52-week highs and 30 new lows, while the Nasdaq recorded 16 new highs and 85 new lows.