U.S. stocks edging upward ahead of earnings season’s first wave of reports

U.S. stocks switched between small gains and losses early Tuesday, as inflation worries ahead of third-quarter earnings appeared to weigh on sentiment.

What are major indexes doing?
  • The Dow Jones Industrial Average DJIA, +0.01% fell 66.04 points, or 0.2%, to 34,430.02.
  • The S&P 500 SPX, -0.12% was off 4.20 points, or 0.1%, at 4,356.99.
  • The Nasdaq Composite COMP, -0.21% shed 10 points, or 0.1%, to 14,476.20.

On Monday, stocks gave up early gains to end lower, with the Dow and S&P 500 each falling 0.7%, while the Nasdaq Composite lost 0.6%. Columbus Day marked the third lowest volume day of the year, according to Dow Jones Market Data.

What’s driving the market?

With earnings season set to start on Wednesday, investors are worried that supply-chain woes and inflation will chip away at corporate profits.

Earnings per share for S&P 500 constituents are forecast to grow 25% in the third quarter, according to S&P Global Market Intelligence. Second-quarter EPS grew a spectacular 89%.

Earnings Watch: Earnings are headed for an all-time high, if supply-chain and staffing woes don’t get in the way

“Many companies that move or make things have been warning of profit pressures owing to rising input costs and supply chain related production shortfalls. This is reflected in prudent analyst consensus earnings per share estimates for the third quarter,” said David Bianco, chief investment officer for the Americas at DWS.

See: How stock-market investors can make sense of supply-chain chaos

DWS still is forecasting a 4,400 level for the S&P 500 at the end of the year.

Read: The 2021 stock-market highs are ‘almost certainly’ in, unless earnings clear this bar

Meanwhile, the International Monetary Fund said it now sees global growth of 5.9% this year — down one-tenth of a percent from its July forecast — and then slowing to 4.9% growth in 2022. The IMF cut its U.S. growth estimate for 2021 by 1% to 6%, its German forecast by five-tenths to 3.1% and its Canadian forecast by six-tenths to 5.7%.

Also see: Failing to bring Covid-19 under control will cost $5.3 trillion in lost global growth over next five years, IMF estimates

Data on inflation is due this week, with the U.S. consumer-price index set for release Wednesday and the producer-price index due Thursday.

The National Federation of Independent Business early Tuesday said its optimism index slipped one point to 99.1 in September, the lowest reading since March, as small-business owners remained frustrated by shortages of supplies and skilled labor.

On the labor-market front, data showed U.S. job openings dropped to 10.4 million in August from 11.1 million.

News reports said China Evergrande Group, the troubled real-estate developer, missed a third round of bond coupon payments in three weeks, underlining worries about China’s highly leveraged property sector.

Which companies are in focus?
  • General Motors Co. GM, +1.62% said it reached an agreement with Korea’s LG Electronics Inc. 066570, +3.33% over the costs of recalling Chevrolet Bolt electric vehicles and electric utility vehicles due to manufacturing defects in battery modules that LG supplied to GM. Shares of GM rose 0.3%.
  • Shares of Matson Inc. MATX, +5.85% rose 4.7%, after the shipping company late Monday said that increased demand for its shipping services will lead to greater-than-expected profit. Matson added a second shipping route from China to Southern California in May 2020, then another one to Northern California earlier this year, known as the CCX.
  • Signet Jewelers Ltd. SIG, -3.14% s announced the $490 million acquisition of Charlotte, N.C.-based Diamonds Direct USA Inc., a jewelry retailer that is “off-mall” and adds to Signet’s bridal business. Signet shares fell 3.3%.
  • CarMax Inc. KMX, +1.79% said Tuesday it planned to hire 3,700 employees by the end of the year. Shares were up 1.3%.
What are other markets doing?
  • The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 1.602% was down 2.2 basis points at 1.589%. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, +0.16%, a measure of the currency against a basket of six major rivals, edged up 0.2% to 94.50.
  • Oil futures edged higher, with the U.S. benchmark CL00, +0.26% up 0.2% after closing above $80 a barrel on Monday for the first time in nearly seven years. Gold futures GC00, +0.51% rose 0.6% to $1,767 an ounce.
  • The Stoxx Europe 600 SXXP, -0.19% was off 0.2%, while London’s FTSE 100 UKX, -0.26% fell 0.6%.
  • The Shanghai Composite SHCOMP, -1.25% dropped 1.2%, while the Hang Seng Index HSI, -1.43% was down 1.4% in Hong Kong and Japan’s Nikkei 225 NIK, -0.94% lost 0.9%.

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