After a positive start to the trading day, the three major indexes on the New York Stock Exchange closed on Monday.
- The S&P 500 fell 0.8 percent to 3,831.83.
- Nasdaq fell 0.8 percent to 11360.05 points.
- The Dow Jones closed down 0.7 percent to 31,072.61.
At the close of trade on Wall Street, the 10-year US government bond yield was 2.96%, while the VIX, also known as the Fear Index, rose 5.8% to 25.6 on Monday.
The decline comes after a strong close last week. On Friday, S&P, Nasdaq and Dow Jones rose 1.9, 1.8 and 2.1 percent, respectively. Good quarterly numbers from two of the world’s largest financial firms, Citigroup (+13.2 per cent) and Wells Fargo (+6.2 per cent) contributed to the strong rally.
On Monday morning, Bank of America and Goldman Sachs presented their quarterly numbers. The former had a flat day on the stock exchange while the latter was up 2.6 percent after good quarterly numbers.
Other companies publishing their quarterly numbers this week are Johnson & Johnson, Netflix, Lockheed Martin, Tesla, United Airlines, Union Pacific and Verizon.
Technology giant Apple fell 2.1 percent to $147.07 on Monday. Peter Bokfar, chief investment officer at Bleakley Consulting Group, highlights the ongoing transition from goods to services among the American people.
“Consumers are not going to buy laptops or change their phones every year,” he told CNBC.
A Wall Street Journal report on Sunday said the central bank is on track to raise interest rates by 75 basis points, rather than the full percentage point increase that some market participants have estimated. Goldman Sachs’ chief economist, Jan Hatzius, said in an overnight note that he also expects the Federal Reserve to raise interest rates by three quarters.
However, fears of a recession have surfaced in recent weeks, with rising inflation, sharp interest rate increases and yield curve inversion.
“Markets are likely to remain volatile in the coming months and trade is based on hopes and concerns about economic growth and inflation,” said Mark Heffel, chief investment officer at UBS Global Wealth Management.
Despite the growing fear of a recession, the S&P 500 companies are expected to increase their earnings by 4.2 percent compared to the same quarter last year, according to analyst estimates compiled by FactSet.
Full-year earnings expectations remain high, and analysts estimate that S&P 500 companies will increase their 2022 revenue by 9.9%, according to data compiled by FactSet.
“We expect the results to be good overall,” said Terry Sandvin, equity analyst at US Bank Wealth Management. “The focus will be mainly on margins and how well companies can pass on higher input costs to consumers. This will determine our valuations.”
Energy stocks rose in the broad S&P 500 Index on Monday. Hess shares rose 4.8 percent, Devon Energy 3.6 percent, and Marathon Oil rose 3.5 percent.
Meanwhile, Boeing shares fell slightly after news of Delta Airlines’ purchase of 100737 Max 10 aircraft. Shares in Delta jumped about 3.5 percent.
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