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Stocks close mixed as traders await another week of earnings

CNBC logo CNBC 7/23/2018 Fred Imbert and Alexandra Gibbs

Stocks ended mixed Monday as bank shares rose and traders awaited the release of quarterly results from some of the largest technology companies and key economic data.

The Dow lost 13 points, the S&P 500 added nearly 0.2 percent, and the Nasdaq advanced almost 0.3 percent. 

Bank shares outperformed, with the SPDR S&P Bank ETF (KBE) jumping 1.6 percent. Bank of America and J.P. Morgan Chase both rose more than 2 percent, while Citigroup, Morgan Stanley and Goldman Sachs gained more than 1 percent. The banks got a boost from higher interest rates as the benchmark 10-year Treasury yield traded at 2.95 percent.

Google parent Alphabet is set to report earnings after the bell on Monday, while Facebook and Amazon are scheduled to release their results later this week. Technology shares have been the best performers of 2018, rising 15.4 percent through Friday’s close.

Alphabet shares rose 0.8 percent, while Facebook traded 0.6 percent higher. Amazon shares declined nearly 0.5 percent.

So far, more than 17 percent of S&P 500 companies have reported earnings for the previous quarter, with 82 percent of those companies topping analyst expectations, according to FactSet data. Wall Street has high hopes for this earnings season, with analysts expecting year-over-year growth of 20 percent. 

“It’s early days for Q2 earnings season, but so far this is looking to be a very good reporting cycle,” Nicholas Colas, co-founder of DataTrek Research, said in a note Monday. Here’s the strange bit, however: analysts are not yet raising their Q3 earnings estimates. In fact, they are marginally lower than at the end of June.” 

“This is not what we expected to see, given the magnitude of the beats so far for Q2. Our explanation (for now) it that the revisions will come as more companies report and analysts assimilate all that data into future earnings expectations,” Colas said.

Hasbro reported better-than-expected earnings Monday before the bell, sending its shares higher by more than 12 percent. Halliburton posted an in-line quarterly profit, but its stock fell more than 1 percent.

Wall Street also looked ahead to the release of second-quarter GDP data. The data, which are scheduled for release on Friday, are expected to show U.S. economic growth of 4.1 percent, according to a Reuters estimate.

Last week, National Economic Council Director Larry Kudlow said economic growth could top 4 percent for “a quarter or two.” Kudlow added: That's all for the good. Literally millions more people are working."

Meanwhile, concerns over global trade kept simmering.

At a G-20 meeting in Argentina over the weekend, finance leaders from the world’s biggest economies called for more dialogue to help prevent geopolitical and trade tensions from negatively impacting global economic growth. 

The meeting took place after President Donald Trump told CNBC's Joe Kernen last week he is ready to slap tariffs on all $505 billion of Chinese goods imported to the United States. The U.S. has already implemented tariffs on $34 billion of Chinese imports, as well as charges on steel and aluminum imports from other countries.

Trade fears have kept stock gains in check recently. Since June, the S&P 500 has traded in a 4.6 percent range through Friday's close.

Trump also commented on the Federal Reserve last week, saying he was “not thrilled” about rising interest rates, and expressed concern that the U.S. central bank could upset the economic recovery. The Fed has raised rates twice this year and expects to hike two more times before year-end.

Shares of Fiat Chrysler fell more than 2 percent after Sergio Marchionne stepped down from his post as CEO due to health reasons. Mike Manley, who runs the company’s Jeep division, will take over for Marchionne. 

Tesla’s stock dropped 4 percent after the Wall Street Journal reported the company is asking some suppliers to refund part of previous payments.


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