US stocks hover near records as investors await retail earnings

American stocks reached near-record levels on Monday, anticipating the earnings releases from the country's largest retail chains that may shed light on consumer behavior amidst high inflation and a sluggish job market. The S&P 500 diminished by 0.1 percent, yet remains close to its highest point since Thursday. The Dow Jones Industrial Average declined by 209 points, or 0.4 percent, as of noon Eastern time, while the Nasdaq composite climbed 0.2 percent.

Wall Street has been climbing to record highs largely due to thriving US company profits. S&P 500 companies are projected to achieve approximately 50 percent growth in earnings per share in the spring compared to the previous year, according to FactSet. This projection is substantially higher than analysts anticipated and would be the most significant since five years ago, during the economy's recovery from the COVID pandemic.

Almost all companies in the S&P 500 have submitted their spring earnings reports, with major retailers, such as Home Depot, Target, and Walmart, set to announce their results this week. These companies face challenges as their customers' incomes may be increasingly uncertain following a surprising job loss increase by US employers last month, and their customers continue to face rapidly rising costs due to inflation remaining much higher than desired.

A recent report indicated that shoppers spent less at US retailers last month than in June, and retailers' CEOs may provide insights on their current situation this week. Meanwhile, the wait continues for the impact of the conflict with Iran on oil prices. Brent crude prices rose 0.7 percent to $89.13 on Monday, a relatively minor change compared to its fluctuating recent trends.

Brent oil prices fluctuated between $72 and $102 last month as hopes and fears about a potential US-Iran deal to allow oil tankers to freely leave the Persian Gulf alternated. In the bond market, Treasury yields increased following strong manufacturing growth in New York state, with the 10-year Treasury yield reaching 4.7 percent from 4.68 percent.

This significant rise in yields, from 3.97 percent before the Iran conflict, occurred mainly due to higher oil prices increasing inflation pressure and raising the likelihood of the Federal Reserve needing to raise interest rates. Higher rates could help contain inflation but do so by intentionally slowing the economy and making borrowing more expensive for everyone.

The average long-term US mortgage rate has risen close to its highest level in a year due to the surge in the 10-year Treasury yield. Reports from last week suggested that inflation last month was less severe than in earlier summer months, raising hopes that the Fed may delay any interest rate hikes until later in the year. Typically, investors on Wall Street eagerly await guidance from the Federal Reserve chairman about future interest rates, but the Fed's new chairman, Kevin Warsh, may offer limited insights during this year's economic symposium in Jackson Hole, Wyoming, at the end of the month, according to Thierry Wizman, a strategist at Macquarie Group.

Warsh has expressed a desire to provide Wall Street with less guidance regarding the Fed's rate plans. On Wall Street, trading was relatively subdued. Aerospace company L3Harris Technologies dropped 4.4 percent after announcing the departure of its CEO and chairman, Christopher Kubasik, due to "conduct that was not consistent with the company's values."

The company provided few details, stating that the conduct was unrelated to its financial reporting, controls, customer relationships, or operational performance. Alphabet, Google's parent company, saw a slight decrease of 0.6 percent, despite Berkshire Hathaway increasing its investment in Alphabet, along with several homebuilders.

Berkshire Hathaway, known for its investor Warren Buffett's skill in purchasing stocks at affordable prices, sold all its shares in the company that sells Modelo beer and Robert Mondavi wine. Abroad, stock indexes declined in Europe following a stronger performance in Asia. Tokyo's Nikkei 225 index increased by 0.7 percent after a report stated that Japan's economy grew at a slower pace in the April-June quarter than economists had expected.

Hong Kong's and Shanghai's indexes rose by 1.3 percent and 1.4 percent, respectively, among the world's most significant movements.