US stock market today: Wall Street benchmarks were on Monday hovering close to record levels as investors looked ahead to a week of earnings from some of the country’s biggest retailers. Their results could offer clues about how consumers are coping with elevated inflation and a weakening labour market.The S&P 500 edged down 0.1%, remaining close to the record high reached on Thursday. As of 9:35 a.m. Eastern time, the Dow Jones Industrial Average had fallen 174 points, or 0.3%, while the Nasdaq Composite was little changed.Trading on Wall Street was relatively subdued.L3Harris Technologies dropped 2.6% after the defence contractor announced that Christopher Kubasik had left his positions as CEO and chairman following “certain conduct by Kubasik that was not consistent with the values of the Company.” The company did not provide further details, but said the matter was unrelated to financial reporting, internal controls, customer relationships or operational performance.Alphabet slipped 0.1% despite Berkshire Hathaway disclosing that it had increased its holding in Google’s parent company, along with investments in several homebuilders. Berkshire, under its former CEO and renowned investor Warren Buffett, became known for seeking out stocks it considered reasonably priced.
What’s driving the Wall Street rally?
The rally that has carried Wall Street to record levels has been fuelled largely by strong corporate profits, according to an AP report. Companies in the S&P 500 are expected to post roughly 50% growth in earnings per share for the spring quarter compared with the same period a year earlier, according to FactSet.That would significantly exceed earlier expectations and represent the strongest growth in five years, when the economy was rapidly recovering from the disruption caused by the COVID pandemic.Most S&P 500 companies have already reported their spring-quarter results. The major retailers are among those still to announce their numbers, with Home Depot, Target and Walmart scheduled to report during the coming week.The retailers are entering the results season under pressure. Household incomes could come under greater strain after US employers unexpectedly eliminated more jobs than they created last month. At the same time, consumers continue to face rapidly rising costs as inflation remains well above desired levels.Data released last week showed that Americans unexpectedly reduced their spending at retailers in July compared with June. Investors will therefore be looking to retail executives this week for indications of how consumer behaviour is changing and what they are seeing across their businesses.
Oil prices in focus
Meanwhile, markets continue to watch the impact of the war with Iran on crude prices. Brent crude rose 0.7% to $89.15 a barrel on Monday, a relatively limited move compared with the sharp fluctuations seen recently.Brent prices swung between $72 and $102 a barrel last month as expectations repeatedly shifted over whether the United States and Iran could reach an agreement that would allow oil tankers to resume unrestricted passage out of the Persian Gulf.In the bond market, Treasury yields moved slightly higher after experiencing sharp swings in recent weeks. The yield on the 10-year Treasury rose to 4.70% from 4.68% late Friday, following data that showed manufacturing activity in New York state grew more strongly than economists had anticipated.The 10-year yield has climbed significantly from its 3.97% level before the war with Iran. Much of the increase has been driven by higher oil prices, which have intensified inflation concerns and increased expectations that the Federal Reserve may need to raise interest rates.Higher interest rates can help contain inflation, but they also deliberately slow economic activity and increase borrowing costs for households and businesses. The rise in the 10-year Treasury yield has already pushed the average rate on long-term US mortgages close to its highest level in a year.However, inflation data released last week offered some relief, showing that price increases in July were less severe than earlier in the summer. That has raised expectations that the Fed may be able to delay a decision on whether to increase its main interest rate until later in the year.Overseas markets were mixed, with European indexes edging lower after Asian markets ended with stronger gains.Hong Kong’s index advanced 1.3%, while Shanghai climbed 1.4%, putting both among the biggest moves in global markets.