Stock market today: Wall Street drifts ahead of a big week for earnings reports

NEW YORK (AP) — Wall Street is drifting Monday following its three-week losing streak.

The S&P 500 was 0.1% higher in midday trading after giving up most of an earlier, modest gain. The Dow Jones Industrial Average was up 17 points, or less than 0.1%, as of 11:25 a.m. Eastern time, and the Nasdaq composite was 0.1% higher.

Truist Financial rose 2.3% for one of the bigger gains in the market after it reported better profit for the start of the year than analysts expected.

Zions Bancorp. also climbed on a stronger report than expected. Analysts called it a solid showing, and its stock added 2.4% to recover some of the sharp slide it took last year on worries surrounding the strength of the larger regional-banking industry.

They helped offset a 5% drop for Tesla, which announced more cuts to prices over the weekend. Elon Musk’s electric-vehicle company has seen its stock drop more than 40% already this year, and it will report its first-quarter results on Tuesday.

It’s a big week for earnings reports generally, with roughly 30% of the companies in the S&P 500 scheduled to say how much they made during the year’s first three months. That includes several companies that have come to be known as part of the “Magnificent Seven,” beyond Tesla. This handful of companies was responsible for the majority of the S&P 500’s big gain last year, raising the bar of expectations for them to justify their stock prices.

Analysts believe those seven stocks as a group saw growth in their earnings per share slow to 39% from 63% at the end of last year, according to strategists at Bank of America. This past quarter may also have marked the trough for earnings declines among the other 493 companies in the index. The difference in growth between them and the Magnificent Seven should close by the end of the year, strategists Ohsung Kwon and Savita Subramanian said in a BofA Global Research Report.

Verizon Communications helped kick off this week’s reports by disclosing a drop in profit that wasn’t as bad as analysts expected. It cited price increases and other measures to support its revenue.

Verizon’s stock swung from an early gain to a loss of 4% after it reported weaker revenue for the first quarter than expected and kept its forecast for full-year profit the same.

Even more pressure than usual is on companies broadly to deliver fatter profits and revenue. That’s because the other big factor that sets stock prices, interest rates, looks unlikely to offer much help in the near term.

Top officials at the Federal Reserve warned last week that they may need to keep interest rates high for a while in order to ensure high inflation is heading down to their 2% target. That was a big letdown for financial markets, dousing hopes that had built after the Fed earlier signaled three cuts may come this year.

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Lower rates had earlier appeared to be on the horizon after inflation cooled sharply last year. But a string of reports this year showing inflation has remained hotter than expected has raised worries about stalled progress.

Traders are now largely forecasting just one or two cuts to rates this year, according to data from CME Group, down from expectations for six or more at the start of the year. They’re also betting on the possibility of no cuts to rates this year.

Worries about “sticky” inflation are one of the reasons strategists at Stifel are encouraging caution.

Stocks generally look more expensive, in part because of a frenzy on Wall Street around anything related to artificial-intelligence technology. Some analysts are suggesting stock prices could keep steaming ahead as the mania builds even higher around AI, but Stifel’s Barry Bannister and Thomas Carroll point to signs that “the speculative fever would break” for tech, including a possible top for the price of bitcoin. They suggest caution well into the year’s third quarter, which stretches from July through September.

Bitcoin remains below its peak set a month ago, but it rose Monday.

In the bond market, the yield on the 10-year Treasury edged down to 4.62% from 4.63% late Friday. The two-year Treasury yield, which moves more closely with expectations for the Fed, slipped to 4.96% from 4.99%.

In markets abroad, stocks rose 1.8% in Hong Kong but fell 0.7% in Shanghai after the People’s Bank of China kept its 1-year and 5-year loan prime rates unchanged. The Chinese central bank is waiting to see if more stimulus is needed after the economy expanded at a faster-than-expected rate in the first three months of the year, according to analysts.

Indexes were higher across much of the rest of Asia and Europe.

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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.