NEW YORK, RAW – The S&P 500 have dipped as fuel demand worries during a resurgent pandemic sent energy stocks lower but rising US Treasury yields lifted financials stocks, keeping Wall Street’s benchmark index near record levels.
Energy shares were the worst performing of the 11 major S&P sectors, down along with crude prices as mounting coronavirus cases and the potential for restrictions, particularly in China, raised worries about the fuel demand outlook.
China reported more COVID-19 infections while US cases and hospitalisations were at a six-month high as the Delta variant spread.
Financial shares gained, buoyed by a climb in the 10-year US Treasury yield back above the 1.30 per cent level as a report on job openings showed further evidence of an improving labour market.
“In general, of the economically sensitive cyclicals, it is the interest-rate sensitives that are going to celebrate this normalisation of yields, even if normal is 1.30 per cent versus where we were a week ago, which was 1.12 per cent. That is driving the action,” said Art Hogan, chief market strategist at National Securities in New York.
Investors will watch US inflation readings this week for hints about the path of Federal Reserve policy.
On Monday, Atlanta Fed president Raphael Bostic said the United States should be well past the pandemic crisis before the central bank raises rates.
Richmond Fed President Tom Barkin said high inflation this year may have already met one of the Fed’s benchmarks for raising interest rates.
Later this month, a meeting of Fed leaders in Jackson Hole, Wyoming is expected to provide insight into the central bank’s potential plan to begin tapering its bond purchases.
The Dow Jones Industrial Average fell 107.91 points, or 0.31 per cent, to 35,100.6, the S&P 500 lost 4.11 points, or 0.09 per cent, to 4,432.41 and the Nasdaq Composite added 24.42 points, or 0.16 per cent, to 14,860.18.
A strong earnings season has helped US stocks climb to record highs over the past two weeks as several consensus-beating results from major firms reinforced belief in a post-COVID economic recovery.
As of Friday, analysts expected second-quarter profit growth of 93.1 per cent for S&P 500 companies, according to IBES data from Refinitiv.
Of the 443 companies in the index that have reported earnings so far, 87.4 per cent beat analyst expectations, the highest on record.
Sanderson Farms Inc climbed after it agreed to be bought for $US4.53 billion ($A6.18 billion) by commodities trader Cargill Inc and investment firm Continental Grain Co at a time when meat prices have been soaring.
Tyson Foods Inc advanced after the meat processing company raised its forecast for fiscal 2021 revenue.