S&P 500 in Choppy Trade Ahead of Earnings, Inflation Update

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Investing.com – The S&P 500 swung between gains and losses Tuesday, as investor sentiment remained cautious ahead of the third-quarter quarter earnings season and ongoing concerns about slowing growth.

The S&P 500 fell 0.01%, the Dow Jones Industrial Average was flat, the Nasdaq Composite was up 0.1%.

Investors continued to keep their powder dry, with just a day to go until major Wall Street banks kick off the quarterly earnings season in earnest.

Banking stocks are up about about 40% for the year so far, as the favorable backdrop of rising rates continues to support the sector.  

JPMorgan Chase & Co (NYSE:JPM) reports third-quarter results Wednesday, followed by Citigroup (NYSE:C) and Bank of America (NYSE:BAC) on Thursday.

Loan growth, which has slumped since the pandemic and been slow to recover, will likely be one of the closely watched metrics.

Big tech traded mostly lower, struggling to shake off the sluggish start to the week even as Treasury yields, the foe of growth stocks, fell.

Google-parent Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL), Facebook (NASDAQ:FB) were in the red, while Amazon (NASDAQ:AMZN) was in the red.

Apple, meanwhile, said it plans to launch an event on Oct. 18, during which the company could unveil new MacBook laptops and AirPods headphones.

The 10-year Treasury yield fell below 1.6% following auction results that showed demand for the note remained strong.

Ahead of the inflation report due Wednesday, Fed members continue to flag above-trend inflation as a concern.

“Underlining inflation is indeed above the committees 2% objective,” Atlanta Federal Reserve President Raphael Bostic said Tuesday, “Severe and pervasive supply chain issues will probably last longer than initially expected.

Concerns over persistent inflation come at time when global growth is expected to slow, exacerbating investor fears of stagflation.

The International Monetary Fund trimmed its global gross domestic product by 0.1% to 5.9% this year from 6.0% in July.

The U.S. is expected to report Wednesday that consumer price index for the 12 months through September rose by 5.3%.

But not everyone is jumping on the stagflation bandwagon, with some suggesting that it’s only matter of time before supply starts to catch up with strong demand.

“Clogged supply chains and sharply higher commodity prices have intensified the debate around stagflation. We find little in the outlook to support the theory and believe the role of demand is underappreciated,” Morgan Stanley (NYSE:MS) said in a note.

In Washington, the House is expected to vote and pass the $480 billion short-term debt ceiling hike later Tuesday, providing the U.S. with funding until early December. The legislative measure is expected to be signed into law before the Oct. 18 deadline to avoid the U.S. defaulting on its debt.

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