Statues adorn the facade of the New York Stock Exchange, July 14, 2022, in New York. Stocks are opening mixed on Wall Street Monday, July 25, 2022. Cruise lines are falling while gold miner Freeport-McMoRan and Texas-based oil explorer Diamondback Energy are leading the gainers at the opening bell. (AP Photo/John Minchillo)
Stocks on Wall Street were mixed in morning trading Monday, as investors braced for a two-day meeting of the Federal Reserve this week where it’s expected the central bank will raise interest rates sharply to combat inflation.
The S&P 500 index was up 0.2% as of 11:42 a.m. Eastern after, fluctuating between gains and losses. The Dow Jones Industrial Average was up 105 points, or 0.3%, at 32,001. The technology-heavy Nasdaq Composite was down 0.4%.
The major indexes are coming off solid gains last week following a mix of mostly better-than-expected reports on corporate profits. Falling yields in the bond market also helped, easing the pressure on stocks after expectations for rate hikes by the Fed sent yields soaring much of this year.
On Wednesday, most economists expect the Fed to announce a three-quarter percentage point hike in its short-term rate, a second consecutive hefty increase that it hasn’t otherwise implemented since 1994. It would put the Fed’s benchmark rate in a range of 2.25% to 2.5%, the highest since 2018.
The U.S. economy is slowing, but healthy hiring shows it isn’t yet in recession, Treasury Secretary Janet Yellen said Sunday on NBC’s “Meet the Press.” She spoke ahead of the release this week of a slew of economic reports that will shed light on an economy currently besieged by rampant inflation as interest rates rise.
Some early signs suggest that inflation may be cooling down from red-hot levels. Auto club AAA said on its website as of Monday that the average price of a gallon of regular gas is $4.36 per gallon. That’s down 16 cents from a week ago, and 55 cents cheaper than late June, when the average price was $4.91 per gallon. Crude oil prices have fallen nearly 10% this month alone.
Outside of the Fed meeting, the highest-profile report will likely be Thursday, when the Commerce Department releases its first estimate of the economy’s output in the April-June quarter. Some economists forecast it may show a contraction for the second quarter in a row. The economy shrank 1.6% in the January-March quarter. Two straight negative readings is informally considered a recession.
Earnings will be quiet on Monday, but pick up later this week when technology heavyweights like Apple, Meta, Microsoft and Amazon all report their results. Other big companies reporting this week include Coca-Cola and McDonald’s, where investors may look to see the impact of inflation on these inflation-conscious, consumer-facing companies.
Technology stocks were the biggest drag on the S&P 500 Monday. Chipmaker Nvidia fell 3.4%.
Restaurant chains, cruise line operators and other companies that rely on direct consumer spending also fell. Olive Garden owner Darden Restaurants was 3.2% lower, while Carnival fell 2.4%.
Energy companies and banks kept index losses in check. Exxon Mobil rose 3% and Bank of America added 1.2%.
World Wrestling Entertainment jumped 9.5% after CEO Vince McMahon retired Friday amid an investigation into alleged misconduct.
Weber slumped 18% after the Illinois-based grill maker ousted its CEO and named an interim replacement.
Bond yields rose. The two-year Treasury yield, which tends to move with expectations for the Fed, rose to 3.02% from 2.97% late Friday. The 10-year yield, which influences mortgage rates, rose to 2.81% from 2.78%.
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