S&P 500 is down, though earnings outcomes proceed to beat expectations

The S&P 500 fell on Thursday, although earnings results for the second quarter continued to beat expectations.

The broad index lost around 0.3%. The Nasdaq Composite lost around 0.5%. The Dow Jones Industrial Average was trading near the flatline.

The slight retreat of the S&P 500 came as the index hovered near its record high. The S&P 500 is up 16% this year in anticipation of a big profit comeback.

“The market has done as well as it did last year because it expected the earnings improvement we are seeing,” said Liz Ann Sonders, Charles Schwab’s chief investment strategist. “A lot of news is priced in.”

Morgan Stanley’s earnings report for the second quarter exceeded analyst expectations on Thursday morning. The bank’s shares were lower after the market opened and then traded modestly higher. Morgan Stanley’s stock rose 35% this year, which was included in results.

Initial jobless claims for the week ending July 10 totaled 360,000, a new pandemic-era low, as expected by economists.

Federal Reserve Chairman Jerome Powell began his second day of Congressional hearing, this time before the Senate Banking Committee.

“The challenge we face is how to respond to this inflation, which is greater than we expected, or that anyone expected. To the extent that it is temporary, it would not be appropriate to respond to it. As it gets longer and longer, we need to keep reassessing the risks affecting inflation expectations that are of longer duration, and we are monitoring that “Said Powell.

The central bank chief’s comments appeared to support a slight return in yields as 10-year government bond yields rebounded from session lows.

Powell, in a testimony to the House of Representatives Financial Services Committee on Wednesday, allayed investor fears that the central bank’s loose policy might be pulled back soon, even amid inflation.

June producer prices showed higher-than-expected inflation, while the June consumer price index recorded the strongest year-over-year increase since 2008.

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