NEW YORK – US stocks paused on Monday after a sharp rally in the previous session, as investors shift focus to a key inflation gauge later this week.
For most of the day, stocks struggled for direction amid disappointing earnings Tyson Foods and Catalent and a short-lived recovery in regional banks.
Catalent Inc shares plunged 25.74% as the drug contract manufacturer posted lower sales and core earnings in 2023, while Tyson Foods fell 16.41% on a surprise second-quarter loss and a cut to its full-year sales forecast.
A rebound in regional lender shares lost steam around midday, with the KBW Regional Banking Index falling 2.82% after posting its best single-day performance in seven weeks on Friday.
The Dow Jones Industrial Average fell 55.69 points, or 0.17%, to 33,618.69, the S&P 500 gained 1.87 points, or 0.05%, to 4,138.12 and the Nasdaq Composite rose 21.50 points or 0.18% to 12,256.92.
The fight for clearer direction comes after a rally on Friday as US jobs data pointed to a resilient job market.
“Whenever you’re having a good day, people need more good news to keep the market going every day in a row,” said portfolio manager Moez Kassam of Anson Funds.
This week’s focus is the Labor Department’s inflation reading on Wednesday, which is expected to show that the consumer price index (CPI) is likely to have risen 0.4% in April after rising 0.1% in March. Producer prices, weekly jobless claims and consumer sentiment data are all due for the week.
This week’s data should help investors gauge whether the Federal Reserve’s aggressive tightening cycle — including its recent 25 basis-point hike last week — is helping to rein in inflation and whether fears of stagflation are justified.
“The overall picture is that inflation is going to stay high for longer and we’re headed for a recession,” said Michael James, managing director of equities trading at Wedbush Securities.
“Whether that’s hard or soft remains to be seen, but until there’s something to disprove that big picture thesis, the overall market will remain somewhat range-bound.”
A rally in regional bank shares proved short-lived, with PacWest Bancorp trimming gains to 3.65% after surging as much as 30% earlier in the session after the lender cut its quarterly dividend sharply to accommodate the to raise capital.
Regional bank stocks tumbled for much of last week on worries surrounding the collapse of First Republic Bank.
“We’ve seen some stabilization in mid-market bank stocks today as people recognize that prices have been moving contrary to underlying fundamentals,” said Carol Schleif, chief investment officer of BMO Family Office.
Warren Buffett’s Class B shares of Berkshire Hathaway Inc. rose 0.70% after posting a $35.5 billion profit in the first quarter, boosted by gains from stocks like Apple.
Zscaler Inc shares rose 20.63% after the cloud security company raised its full-year guidance.
Declining issues outweighed increases on the NYSE by a ratio of 1.14 to 1; on the Nasdaq, a 1.07 to 1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and 7 new lows; the Nasdaq Composite posted 66 new highs and 96 new lows.
For most of the day, stocks struggled for direction amid disappointing earnings Tyson Foods and Catalent and a short-lived recovery in regional banks.
Catalent Inc shares plunged 25.74% as the drug contract manufacturer posted lower sales and core earnings in 2023, while Tyson Foods fell 16.41% on a surprise second-quarter loss and a cut to its full-year sales forecast.
A rebound in regional lender shares lost steam around midday, with the KBW Regional Banking Index falling 2.82% after posting its best single-day performance in seven weeks on Friday.
The Dow Jones Industrial Average fell 55.69 points, or 0.17%, to 33,618.69, the S&P 500 gained 1.87 points, or 0.05%, to 4,138.12 and the Nasdaq Composite rose 21.50 points or 0.18% to 12,256.92.
The fight for clearer direction comes after a rally on Friday as US jobs data pointed to a resilient job market.
“Whenever you’re having a good day, people need more good news to keep the market going every day in a row,” said portfolio manager Moez Kassam of Anson Funds.
This week’s focus is the Labor Department’s inflation reading on Wednesday, which is expected to show that the consumer price index (CPI) is likely to have risen 0.4% in April after rising 0.1% in March. Producer prices, weekly jobless claims and consumer sentiment data are all due for the week.
This week’s data should help investors gauge whether the Federal Reserve’s aggressive tightening cycle — including its recent 25 basis-point hike last week — is helping to rein in inflation and whether fears of stagflation are justified.
“The overall picture is that inflation is going to stay high for longer and we’re headed for a recession,” said Michael James, managing director of equities trading at Wedbush Securities.
“Whether that’s hard or soft remains to be seen, but until there’s something to disprove that big picture thesis, the overall market will remain somewhat range-bound.”
A rally in regional bank shares proved short-lived, with PacWest Bancorp trimming gains to 3.65% after surging as much as 30% earlier in the session after the lender cut its quarterly dividend sharply to accommodate the to raise capital.
Regional bank stocks tumbled for much of last week on worries surrounding the collapse of First Republic Bank.
“We’ve seen some stabilization in mid-market bank stocks today as people recognize that prices have been moving contrary to underlying fundamentals,” said Carol Schleif, chief investment officer of BMO Family Office.
Warren Buffett’s Class B shares of Berkshire Hathaway Inc. rose 0.70% after posting a $35.5 billion profit in the first quarter, boosted by gains from stocks like Apple.
Zscaler Inc shares rose 20.63% after the cloud security company raised its full-year guidance.
Declining issues outweighed increases on the NYSE by a ratio of 1.14 to 1; on the Nasdaq, a 1.07 to 1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and 7 new lows; the Nasdaq Composite posted 66 new highs and 96 new lows.
