U.S. stocks churned to start the week Monday as investors weighed surging oil prices, economic worries and major third-quarter earnings results ahead.
The Dow Jones Industrial Average shed 250.19 points, or 0.7%, to close at 34,496.06. The blue chip average was up more than 200 points at its intraday high. The S&P 500 ticked down 0.7% to 4,361.19. The Nasdaq Composite dipped 0.6% to 14,486.20.
Stocks were little changed for most of the day, but selling increased in the final hour, with the major averages closing the session on their lows.
“What we’re seeing right now is the market trying to grapple and come to terms with how to interpret all these inputs,” Plexo Capital Managing Partner Lo Toney said on CNBC’s “TechCheck.” “It’s going to take a little bit of time for things to settle out.”
The U.S. bond market was closed Monday for Columbus Day.
U.S. oil benchmark WTI crude oil topped $82 a barrel at its session highs before trading around $80 Monday. The surging prices added to looming concerns about inflation.
“High or rapid increase in energy costs have triggered recessions in the past and there is a possibility that history could repeat itself if energy prices continue to rise. Higher energy prices result in lower disposable income for consumers,” Bernstein’s Neil Beveridge said in a Monday note.
Energy stocks gained for most of the session as oil prices jumped, but also rolled over with the broader market into the close.
Eight out of 11 S&P 500 sectors closed lower in Monday’s session, with utilities as the worst performing cohort.
Meanwhile, Goldman on Monday cut its U.S. economic growth forecast. The firm lowered its 2022 growth estimate to 4% from 4.4% and took its 2021 estimate down a tick to 5.6% from 5.7%. The firm cited the expiration of fiscal support from Congress and a slower-than-expected recovery in consumer spending, specifically services.
“For activities like going to a movie theater, many individuals don’t anticipate resuming normal spending patterns for at least another 6 months, suggesting a full normalization in economic activity may take some time,” Goldman economist Joseph Briggs said in a note.
This week, major banks will kick off their third-quarter earnings reports. JPMorgan posts results Wednesday, with Goldman Sachs, Bank of America, Morgan Stanley, Wells Fargo and Citigroup following later in the week. Delta Airlines and Walgreens Boots Alliance reports are also on deck.
Investors will be looking for insights into supply chain challenges, particularly going into the holiday shopping season.
Analysts estimate an earnings growth rate of 27.6% for the S&P 500 in the third quarter, which would be the third-highest growth rate since 2010.
After a 4.8% loss in September, the S&P 500 is up more than 1% for the month of October and sits about 4% from its record.