(Photo: AP)
US stock indexes drifted lower on Monday, putting at least a temporary halt to their weekslong advance. The pause comes at the beginning of a busy week for markets.
The S&P 500 was slightly lower from the onset of trading, and if it stays down, it would be the first loss in eight days for the index. The trend has been decidedly upward in recent weeks as stocks have grinded higher, mostly in modest increments. It follows a torrid start to the year, when the S&P 500 surged to its best quarter in nearly a decade after the Federal Reserve calmed investors by saying it may not raise interest rates at all in 2019.
Later this week, investors will get more clues about the Fed’s intentions. The central bank will release the minutes from its last policy meeting on Wednesday, and a report on consumer prices the same day will show whether inflation remains modest, which would give the Fed more leeway to keep interest rates low.
Earnings reporting season will begin in earnest at the end of this week, with JPMorgan Chase and other big banks set to tell investors how much they earned during the first three months of the year. Expectations are low for the entire market, and analysts are forecasting the first drop in profits in years.
That puts more focus on what CEOs say about their profit prospects for the rest of the year. Analysts are expecting profit growth to resume after the weak first quarter, and if CEOs undercut those beliefs, it would put downward pressure on stock prices.
Investors are also watching across the Atlantic, as the UK prime minister prepares to meet leaders from Germany and France ahead of a Friday deadline, when the United Kingdom is scheduled to depart the European Union. Economists worry about the drag on trade and the economy if the departure happens without a withdrawal agreement.
All this comes against a backdrop of heightened worries about global economic growth and a global trade war. Growth has slowed, and investors are debating how much last week’s stronger-than-expected report on US jobs changes the picture. Negotiations between the United States and China on their trade dispute are ongoing.
KEEPING SCORE: The S&P 500 was down 0.2% as of 1:15 p.m. Eastern time. It’s still within 1.5% of its most recent record high set in September.
The Dow Jones Industrial Average was down 119 points, or 0.5%, at 26,305, and the Nasdaq composite fell 0.1%.
GROUNDED: Boeing slumped 4.6%, one of the biggest losses in the S&P 500, after the company said late Friday that it will cut production of its 737 Max plane. Regulators around the world grounded the jet model after it was involved in two separate fatal crashes that occurred within weeks of each other.
IN THE SLIPSTREAM: Boeing’s struggles have dragged on other stocks, including both its customers and its suppliers, as the groundings affect revenue across the industry.
Spirit AeroSystems Holdings, an aerospace supplier, fell 7.3%. Canaccord Genuity downgraded the stock, saying it’s waiting to get a better sense of how much Boeing’s woes will ultimately hurt Spirit Aerosystem’s results.
Southwest Airlines lost 2.7%. It has 34 Max aircraft, and it has already had to cancel thousands of flights due to the grounding of the jets. Raymond James downgraded Southwest’s stock due to the expected hit to profits, which could run into the busy summer travel season.
SPURTING HIGHER: The price of oil continued its upward climb. Since hitting a bottom below $43 per barrel in December, benchmark US crude has gained more than $20. It rose $1.22, or 1.9%, to $64.30 per barrel Monday. Brent crude rose 76 cents to $71.10.
The move helped energy stocks in the S&P 500 rise 0.4% for the biggest gain among the 11 sectors that make up the index.