Earnings Worries and Strong Dollar Keep S&P 500 and Nasdaq Down

Barry Adams
12 Jul, 2022
New York City

U.S. stocks headed lower ahead of inflation reports and bank earnings later in the week.  

The surging dollar added to a list of worries as the euro traded at parity with the U.S. currency and the Japanese yen and the British pound traded near two-decade lows. 

Emerging market currencies also sank near record lows with surging inflation and rising fuel and food prices. 

Investors have been dialing down the expectations of earnings growth on the rising interest rates, surging fuel prices and rising wage costs. 

The S&P 500 decreased 0.5% to 3,839.57 and the Nasdaq Composite index rose 4.50 to 11,888.30. 

Futures of crude oil dropped $4.58 to $99.51 a barrel and natural gas advanced 58 cents to $6.51 a unit. 

The yield on 10-year Treasury notes declined to 2.94% and stayed below the 3.03% yield for 2-year Treasury notes. 

PepsiCo gained a fraction to $171.45 after the beverages and food products maker reported better than expected revenues and earnings. 

Peloton Interactive gained 4.2% to $9.41 after the high-end bicycle maker said it plans to end all its manufacturing activities and outsource its production. 

Canoo Inc soared 75% to $4.51 after Walmart agreed to buy 4,500 electric battery operated vans from the company with an option to purchase additional 5,500 vehicles. 

PriceSmart declined 3% to $69.45 after the wholesale club chain's quarterly earnings were affected by supply chain disruptions despite rising sales. 

 

The Surging Dollar Worries Global Markets 

The euro is trading at parity to the U.S. dollar and at a two-decade low with the Ukraine war showing no signs of abating and an energy crisis looming in the region. 

The Japanese yen is also at a two-decade low driven by the surging imported prices of energy and rising costs of food. 

The seven years long British political chaos and decades of economic underperformance is finally knocking the British pound to the lowest it has been since 1984. 

One euro fetched $1.003, the British pound closed at $1.183 just shy of $1.15 seen in October 1984, and one dollar yielded 135.81 yen.  

 

European Markets Down On Energy Supply Disruptions 

European markets traded down after Russia shut down Nord Stream 1 natural gas flow for 10 days as previously announced. 

However, Germany and other European nations are bracing for an extended shutdown as the Ukraine war shows no signs of abating. 

Germany gets about one third of its natural gas from Russia. 

The DAX index declined 0.7% to 12,745.78, the CAC-40 fell 0.3% to 5,979.61, and the FTSE 100 index dropped 0.1% to 7,184.74. 

 

Asian Markets Fall On Rising Coronavirus Infections 

Asian markets fell across the region on the rising prospects of a recession and the resurgent highly infectious subvariant of coronavirus infections in parts of China. 

About 30 million people in China are placed in a lockdown condition as several cities in China including parts of Beijing and Shanghai report a rapid spreading of coronavirus.  

The Nikkei index dropped 1.8% to 26,339, the Hang Seng index fell 1.3% to 20,844.74, and the Shanghai index declined 1.0% to 3,281.47.  

Stocks in Tokyo declined after a measure of wholesale prices rose for the third month in a row in June. 

The Japanese yen edged slightly up to 136.65 against one U.S. dollar.  

The Sensex index in Mumbai fell 0.94% to 53,886.61 and rupee dropped to a new low as the dollar surged against worldwide currencies.