The benchmark S&P 500 index ended little changed on Monday after oscillating between positive and negative territory throughout the session after Citigroup kicked off the earnings season with a mixed quarterly report.
The bank reported a better-than-expected profit but also a decline in its net interest margin. The fall in net interest margin triggered a fall in shares of other banks on concerns that it would presage lower profits across the industry as interest rates have dropped.
Though Citigroup shares erased nearly all their losses to end just 0.1% lower, the S&P 500 bank index slid 1.0%. Shares of JPMorgan Chase & Co, Goldman Sachs Group and Wells Fargo & Co – all set to report results on Tuesday – declined more than 1%.
As a result, financial shares fell 0.5% to weigh most heavily on the S&P 500 among its 11 major sectors.
Gains in technology and healthcare shares offset the losses in financial shares, however. Those sectors helped the Nasdaq edge higher to notch its fourth consecutive record closing high.
Second-quarter earnings start in earnest this week, and analysts expect S&P 500 companies to report a 0.3% fall in profit, which would be the first quarterly drop in three years, according to Refinitiv IBES data.
US stocks will likely be muted until more results come in, said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. The three main indexes ended last week at record closing highs as dovish comments from Federal Reserve chairman Jerome Powell bolstered hopes the central bank would cut interest rates later this month.
“It’s definitely a wait-and-see environment,” Pursche said. “Citi was looked at as slightly disappointing.”
Yet solid earnings could give US stocks a further boost, said Lamar Villere, portfolio manager of the Villere Balanced Fund in New Orleans.
“We think earnings are going to be generally positive this season,” he said. “We’ve been on a tear this year, but we still have some room to go.”
The Dow Jones Industrial Average rose 27.13 points, or 0.1%, to 27 359.16, the S&P 500 gained 0.53 point, or 0.02%, to 3 014.3 and the Nasdaq Composite added 14.04 points, or 0.17%, to 8 258.19.
Gilead Sciences shares rose 2.7%, helping to boost the S&P 500 healthcare index, as the drugmaker said it would invest $5.1 billion in a major expansion of its partnership with biotech Galapagos.
Boeing Co shares slipped 1.0% following a Wall Street Journal report Sunday that its 737 MAX jet could stay grounded until early 2020.
Symantec shares tumbled 10.7%, the biggest percentage drop among S&P 500 companies, after a report that the cybersecurity company and Broadcom Inc have ceased deal talks. Broadcom shares rose 1.0%.
Advancing issues outnumbered declining ones on the New York Stock Exchange by a 1.04-to-1 ratio; on the Nasdaq, a 1.06-to-1 ratio favored decliners.
The S&P 500 posted 66 new 52-week highs and two new lows; the Nasdaq Composite recorded 77 new highs and 64 new lows.
Volume on US exchanges was 5.39 billion shares, compared with the 6.69-billion-share average for the full session over the last 20 trading days.