The three major U.S. stock indexes settled mixed on Monday in a lackluster trade as investors prepared for a busy week of earnings reports. Volume was below average during the relatively quiet session, with 5.16 billion shares changing hands, down from the 6.51 billion daily average over the last 20 trading days.
The NASDAQ Composite followed through to the upside following Friday’s strong gains, but the Dow and the S&P 500 Index held inside tight ranges.
In the cash market, the benchmark S&P 500 settled at 2459.14, down 0.13 or -0.01%. The blue chip Dow Jones Industrial Average closed at 21629.72, down 8.02 or -0.04% and the tech-based NASDAQ Composite finished the session at 6314.32, up 1.85 or +0.03%.
The financial sector turned in a weak performance, led lower by poor performances by the big banks including Citigroup, JPMorgan and Wells Fargo. All three released their earnings reports last Friday. Banks were pressured by diminished hopes of an interest rate hike by the Fed before the end of the year.
Although most investors are optimistic about second quarter earnings, they were taken aback shortly before the session began after the world’s largest asset manager reported quarterly earnings below expectations. This news helped push down its stock 3.4 percent.
The energy sector also weakened after crude oil lost nearly 1.50%.
Health care was the worst performing sector. Shares in the health care weakened in response to reports that the Republicans don’t have the votes to back the new bill that would repeal and replace Obamacare.
Forecast
Stocks could get boost early Tuesday in response to Netflix earnings report, released after the closing bell on Monday. The NASDAQ Composite and September E-mini NASDAQ-100 are likely to gain the most in response to the news.
Netflix announced that it added 5.2 million members, well above the Wall Street estimate of 3.23 million. Shares of the company soared more than 10% on the news. The company also beat on revenue, but fell slightly shy of Earnings Per Share.
Stocks could rally on Tuesday with the release of the Goldman Sachs earnings report. Later in the week, investors will get the opportunity to respond to data from Microsoft and Ebay.
According to S&P Capital IQ, overall earnings are expected to grow by 6.2 percent this quarter. This is coming off 15 percent gains in the first quarter.
The direction of the major stock indexes on Tuesday will be determined by the strength of the earnings reports. Investors may even be willing to buy strength at current price levels since they don’t seem to be too concerned the Fed will raise interest rates a third time in 2017.