TOKYO — Stocks were mixed, moving between small gains and losses on Tuesday morning, as investors remain focused on the possibility for more inflation later this year as well as the economic recovery as the coronavirus pandemic comes to a close.
The S&P 500 was down 0.1% as of 10:11 a.m. Eastern. The Dow Jones Industrial Average fell 0.1% and the technology-heavy Nasdaq rose 0.4%. The Russell 2000 index of small company stocks rose 0.2%.
Earnings season is nearly over, with retailers being among the last to report. Walmart rose 4% after the giant retailer’s earnings beat estimates as online shopping saw significant growth from a year ago, driven in part by Americans buying online in the pandemic.
Investors have been worried the last six weeks or so about whether rising inflation will prove to be either temporary or whether it will endure. Prices are rising for everything from gasoline to food as the economy recovers from its more than year-long malaise.
The fear is that the Federal Reserve will have to dial back the extensive support if inflation persists. That includes record-low interest rates and the monthly purchase of $120 billion in bonds meant to goose the job market and economy. For all the worries about inflation, many professional investors are echoing the Federal Reserve in saying that they expect rising prices to be “transitory.”
Higher interest rates drag on most of the stock market, but they are particularly painful for stocks considered the most expensive and those bid up for profits expected far into the future. This mostly involves technology stocks, which rose sharply last year and are valued highly on the future profits those companies could bring in.
AT&T continued a two-day slide after the company announced it would spin off its recently acquired Warner media assets into a new company with other Discovery Communications. AT&T only finished acquiring Warner, which includes HBO, CNN, DC Comics and many other iconic properties, in 2018 and its new CEO is pulling an about-face on his predecessor’s decisions.
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