US Stocks Slip With Earnings in Focus

US Stocks.- The S&P 500 slipped 0.2% and the Nasdaq Composite fell 0.4%. The Dow Jones Industrial Average lost less than 0.1%.

Swings for individual shares have been larger, particularly for some of the companies reporting results. While big banks last week kicked off earnings on a strong note, analysts expect overall S&P 500 earnings to decline for a second straight quarter, notching the steepest quarterly decline since 2020. Tesla, Johnson & Johnson and Netflix are among the companies reporting this week.

The quarter is set to be the most important one for regional banks in decades, with investors on the lookout for what executives say about the banking crisis and their lending standards moving forward.

Shares in State Street fell around 12% after it reported lower-than-expected first-quarter earnings. Charles Schwab said its profit rose in the most recent quarter but that deposits continued to fall. Shares of the brokerage rose 3.2%.

“We have a pretty conservative view of earnings over the next 12 to 18 months,” said Chris Marangi, co-chief investment officer of value for Gabelli Funds.

Investors are also fixated on the path of interest-rate hikes, with many now widely anticipating another increase at the Federal Reserve’s May meeting—a turnaround from a month ago when banking stress fueled bets the Fed would have to cut its rate-raising cycle short. Fed comments last week put rate increases back on the table.

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Fed-funds futures Monday implied an 84% chance the Fed will raise interest rates by 0.25 percentage point in May, CME Group data show. That is up from 78% on Friday and 21% a month ago.

The 10-year Treasury yield rose to 3.595%, from 3.521% Friday. The WSJ Dollar Index gained 0.5%.

“I think the market has come to terms with the fact that the Fed will be hiking again in May,” said Jane Foley, head of foreign-exchange strategy at Rabobank. What happens at Fed meetings in June and beyond remains uncertain, but a lineup of Fed speakers this week may offer some clues, she said to WSJ Edition.

In corporate news, Alphabet shares slid 3.4% after The New York Times reported that Google was devising radical search changes to beat back AI rivals.

Brent crude, the international oil benchmark, shed 1.7% to trade at around $84.85 a barrel. The Stoxx Europe 600 was close to flat. Hong Kong’s Hang Seng Index gained 1.7% and the Shanghai Composite rose 1.4%. In Japan, the Nikkei 225 rose 0.1%.