S&P 500 Dips Ahead Of CPI, Earnings

The S&P 500 fell on Monday as dearth of catalysts left market participants warily embarking on a week back-end loaded with crucial economic data and the unofficial kick-off of second-quarter earnings season.

Risk-off sentiment, further stoked by Macao's first casino shutdown in over two years to curb the spread of COVID-19, also sent the Nasdaq into negative territory, with market leading tech- and tech-adjacent megacap stocks weighing heaviest.

The blue-chip Dow was essentially flat.

"There's nervousness about earnings season and the CPI report, but I think the market has a sense as to what CPI is going to bring this week," said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. "It's what companies are going to say about earnings and guidance going forward that's really putting the worry into the market."

Results from big banks, including JPMorgan Chase & Co, Citigroup Inc, and Wells Fargo & Co, are expected to launch second-quarter reporting season later this week.

Analysts expect steep plunges of year-on-year profits as the companies grow their loan loss reserves, fueling fears of impending recession.

The S&P 500 Banking index slid 0.8%.

Later in the week a raft 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 down as the Federal Reserve moves closer to next week's policy meeting, which is expected to culminate in the second straight 75 basis point interest rate hike.

The market currently expects that the central bank will raise the Fed funds futures rate by 75 basis points in its latest salvo against red-hot inflation, a tactic which some fear could tip an already cooling economy into recession.

By 2:02 p.m. (1802 GMT), the Dow Jones Industrial Average was unchanged at 31,337.37, the S&P 500 lost 23.83 points, or 0.61%, to 3,875.55 and the Nasdaq Composite dropped 172.57 points, or 1.48%, to 11,462.74.

Of the 11 major sectors in the S&P 500, communication services were suffering the biggest percentage drop, while utilities led the gainers.

Before big banks launch second quarter earnings season in earnest on Thursday and Friday, PepsiCo and Delta Air Line results are expected Tuesday and Wednesday, respectively.

As of Friday, analysts see aggregate annual S&P earnings growth of 5.7% for the April to June period, down from the 6.8% forecast at the beginning of the quarter, according to Refinitiv.

Twitter Inc tumbled 9.0% in the wake of Elon Musk saying he is terminating his deal to buy the social media company.

Shares of U.S. casino operators Las Vegas Sands, Wynn Resorts and Melco Resorts fell between 7% and 11% after Macau shuttered all casinos to contain its worst COVID outbreak since the health crisis began.

The broader S&P 1500 Hotel, Restaurant and Leisure index dipped 1.1%.

Declining issues outnumbered advancing ones on the NYSE by a 2.00-to-1 ratio; on Nasdaq, a 2.43-to-1 ratio favored decliners.

The S&P 500 posted two new 52-week highs and 30 new lows; the Nasdaq Composite recorded 18 new highs and 103 new lows.