Stocks have been volatile as investors try to get a better sense of how inflation is affecting the economy, the potential for a recession and whether the Federal Reserve can ease up on its aggressive interest rate increases.
The latest batch of earnings show that companies continue to struggle with the effects of inflation on consumers and supply chains.
Post-it notes and industrial coatings maker 3M fell 6.2% for the biggest drop among S&P 500 stocks after reporting weak fourth-quarter earnings and announcing job cuts. It is the latest company to announce layoffs as consumers get squeezed by inflation and worries grow about a bigger pullback in spending and a possible recession.
Union Pacific fell 3.3% after reporting disappointing earnings and revenue.
Microsoft rose 4% in afterhours trading after the software and technology giant reported earnings that topped Wall Street's forecasts. It closed down 0.2% in regular trading.
Trading in more than a dozen companies was temporarily halted on the New York Stock Exchange after an apparent technical issue caused wide swings in their stock prices right as the market opened. Shares in Morgan Stanley, Wells Fargo, AT&T and other companies moved sharply at the open, triggering the halt in trading. The prices corrected after trading resumed. The NYSE said it was investigating the “reported issues” after all systems were restored.
Markets have been swinging between hope and caution as investors watch to see if the Fed will adjust its inflation-fighting strategy. The central bank has already pulled its key overnight rate up to a range of 4.25% to 4.5% from virtually zero early last year.
The Fed will announce its next rate increase on Feb. 1 and traders expect a quarter-point raise, which would mark a softening of the central bank's pace.
“Where the market and the Fed are having a fairly violent disagreement right now is how long are they going to leave rates at around 5%?” said Scott Ladner, chief investment officer at Horizon Investments.
Long-term bond yields fell. The yield on the 10-year Treasury, which influences mortgage rates, fell to 3.46% from 3.52% late Monday.
Wall Street will get a few economic updates this week that could provide more insight into inflation's impact.
The government will release gross domestic product data for the fourth-quarter on Thursday. Economists expect growth of less than 1%, down from 1.9% in the third quarter, and a contraction during the first half of 2022. Investors will get more updates on personal spending and income on Friday.
In energy trading, benchmark U.S. crude gained 35 cents to $80.48 a barrel in electronic trading on the New York Mercantile Exchange. It settled 1.8% lower overnight. Brent crude, the international pricing standard, rose 50 cents to $86.63 a barrel.
In currency trading, the U.S. dollar edged up to 130.44 Japanese yen from 130.17 yen. The euro cost $1.0902, inching up from $1.0889.
AP Business Writers Damian J. Troise and Alex Veiga contributed to this report.
Yuri Kageyama is on Twitter https://twitter.com/yurikageyama