Stocks slip off records as hot inflation overshadows strong bank earnings

PepsiCo said sales surged 20% as reopening of restaurants boosted demand for soft drinks

U.S. stock markets closed modestly lower Tuesday as investors weighed the hottest inflation reading in over a decade against strong earnings from Wall Street banks. 

The Dow Jones Industrial Average fell 107 points, or 0.31%, while the S&P 500 and the Nasdaq Composite lost 0.35% and 0.38%, respectively. All three of the major averages finished at all-time highs on Monday. 

Ticker Security Last Change Change %
I:DJI DOW JONES AVERAGES 33970.47 -614.41 -1.78%
SP500 S&P 500 4357.73 -75.26 -1.70%
I:COMP NASDAQ COMPOSITE INDEX 14713.902994 -330.06 -2.19%

Consumer prices rose 0.9% month over month in June and 5.4% annually, the Labor Department said Tuesday. Both readings showed the fastest price growth since August 2008. Core prices, which exclude food and energy, also increased 0.9% last month while the 4.5% annual increase was the largest since November 1991.   

The bond market saw little reaction to the hot inflation data, but came under pressure after the tepid 30-year bond auction. Post-auction selling caused the benchmark 10-year yield to finish higher by X basis points at X%. 

On Wall Street, JPMorgan Chase & Co. reported earnings and revenue that exceeded estimates, boosted by dealmaking and the release of reserves set aside to protect against COVID-19-related losses. Slowing loan growth was seen as a worry among investors. 

Ticker Security Last Change Change %
JPM JPMORGAN CHASE & CO. 152.96 -4.72 -2.99%
GS THE GOLDMAN SACHS GROUP, INC. 378.13 -13.33 -3.41%

JPMORGAN PROFIT MORE THAN DOUBLES, BUT REVENUE FALLS

Dealmaking and a strong initial public offering market also helped Goldman Sachs Group Inc. blow past analyst expectations. The firm's investment banking division generated $3.61 billion in revenue, the second most of all time.     

Elsewhere in earnings, PepsiCo beat on both the top and bottom lines and raised its profit forecast as sales surged 20% from a year ago as the reopening of restaurants improved demand for soft drinks. Organic revenue rose across all divisions except for Quaker Food North America, which was the weakest business segment prior to the pandemic.

Ticker Security Last Change Change %
PEP PEPSICO, INC. 153.61 -0.52 -0.34%
KO THE COCA-COLA CO. 54.06 -0.38 -0.70%

Meanwhile, Dow component Boeing Co. said it would deliver less than half of the 787 Dreamliner jets produced but not yet sent to clients due to a defect that was found on some of the wide-body jets. The majority of the aircraft’s cost is paid at delivery, meaning the delays could put further strain on Boeing, which is still navigating the financial burden of the 737 Max grounding and the impact of the COVID-19 pandemic. 

Ticker Security Last Change Change %
BA THE BOEING CO. 209.50 -3.86 -1.81%

Tesla CEO Elon Musk will testify for a second day on Tuesday about the electric-vehicle maker’s $2.6 billion acquisition of Musk’s Solar City in 2016. Tesla shareholders argue the deal had extensive conflicts of interest and didn’t deliver on the profits that were promised.   

Ticker Security Last Change Change %
TSLA TESLA, INC. 730.17 -29.32 -3.86%

In commodities, West Texas Intermediate crude oil ticked up $1.15 to $75.25 a barrel, the highest since October 2018, and gold rose $3.90 to $1,809.40 an ounce. 

Overseas markets were mixed with losses in Europe and gains in Asia. 

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In Europe, Britain’s FTSE 100, Germany’s DAX 30 and France’s CAC 40 all slipped 0.01%. 

Asian bourses were higher across the board with Hong Kong’s Hang Seng index climbing 1.63% while China’s Shanghai Composite and Japan’s Nikkei 225 advanced 0.53% and 0.52%, respectively.