Wall Street dips ahead of earnings deluge

(Reuters) – U.S. stocks pulled back slightly on Monday as investors awaited a barrage of major earnings reports this week, the busiest this earnings season, while a jump in energy stocks kept losses in check.

The S&P 500 logged slight losses for the holiday-shortened week, however the benchmark was about 1% away from a record high hit in September, boosted in part by largely positive earnings.

About a third of the S&P 500 companies, including Boeing Co, Amazon.com Inc and Facebook Inc, will report this week, determining whether investors should be concerned about the start of an earnings recession or whether back-to-back quarters of negative growth can be avoided.

S&P 500 profits are expected to drop 1.7% year-over-year, according to Refinitiv data, in what could be the first earnings contraction since 2016.

“Q1 earnings have largely been a pleasant surprise thus far, but have not ignited investor enthusiasm enough to move the needle in a meaningful way,” Peter Kenny, founder of Strategic Board Solutions LLC in New York, wrote in a client note.

“Given the waning volume and advance/decline metrics evidenced by equity markets in recent weeks, it would be justifiable to be concerned.”

The S&P energy index jumped 1%, the most among the major S&P sectors, as oil prices surged on the United States’ move to further clampdown on Iranian oil exports, tightening global supplies.

Halliburton Co was flat after gaining earlier. The oilfield services provider said a pricing downturn that has plagued the sector was bottoming out as it reported modestly higher activity levels in North America in the first quarter.

At 10:02 a.m. ET the Dow Jones Industrial Average was down 56.52 points, or 0.21%, at 26,503.02, the S&P 500 was down 0.17 points, or 0.01%, at 2,904.86 and the Nasdaq Composite was down 3.26 points, or 0.04%, at 7,994.80.

The technology sector declined 0.13%, weighed down by a fall in shares of Microsoft Corp and Intel Corp, which are scheduled to report their results this week.

Intuitive Surgical Inc fell 4.92% and weighed on the S&P index, after the surgical robotics maker’s quarterly profit missed analysts’ estimates.

Boeing Co was down 1.1% after the New York Times reported the company’s factory in South Carolina, which makes the 787 Dreamliner, has been plagued by “shoddy production and weak oversight”. Another report on Sunday said the planemaker rejected the allegations.

Helping the consumer staples index gain 0.5% was Kimberly-Clark Corp, which touched a near two-year high, as the consumer products maker reported better-than-expected earnings.

Declining issues outnumbered advancers for a 1.27-to-1 ratio on the NYSE and a 1.19-to-1 ratio on the Nasdaq.

The S&P index recorded 8 new 52-week highs and no new low, while the Nasdaq recorded 19 new highs and 30 new lows.