S&P trades near flat as Citigroup results weigh on bank stocks

NEW YORK (Reuters) – The benchmark S&P 500 index struggled for direction in choppy trade on Monday as earnings season began in earnest with a mixed quarterly report from Citigroup Inc (C.N).

The bank reported a better-than-expected profit but also a decline in interest margins. Citigroup shares erased early losses in afternoon trading and were last up 0.3%.

Shares of S&P 500 banks .SPXBK – including JPMorgan Chase & Co (JPM.N), Goldman Sachs Group Inc (GS.N) and Wells Fargo & Co (WFC.N), set to report results on Tuesday – fell 1.0% in the wake of Citigroup’s results.

Financial shares .SPSY, which dropped 0.6%, weighed most heavily on the S&P 500 among its 11 major sectors.

Second-quarter earnings start in earnest this week and analysts expect S&P 500 companies to report a 0.3% fall in profit, which would be the first quarterly drop in three years, according to Refinitiv IBES data.

U.S. stocks will likely be muted until more results come in, said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. The three main indexes ended last week at record closing highs as dovish comments from Federal Reserve Chairman Jerome Powell bolstered hopes that the central bank would deliver its first interest rate cut in a decade later this month.

“It’s definitely a wait-and-see environment,” Pursche said. “If (results) are better than expected, then we can see another leg up.”

The Dow Jones Industrial Average .DJI rose 10.33 points, or 0.04%, to 27,342.36, the S&P 500 .SPX lost 0.02 points, or -0.00%, to 3,013.75 and the Nasdaq Composite .IXIC added 14.62 points, or 0.18%, to 8,258.77.

Gains in healthcare .SPXHC and technology .SPLRCT shares offset losses in financial stocks. A 2.8% rise in Gilead Sciences Inc (GILD.O) shares helped boost the S&P 500 healthcare index, as the drugmaker said it would invest $5.1 billion in a major expansion of its partnership with biotech Galapagos NV (GLPG.AS).

S&P and Dow heavyweight Boeing Co (BA.N) slipped 1.0% following a Wall Street Journal report here on Sunday that its 737 MAX jet could stay grounded until early 2020.

Symantec Corp (SYMC.O) shares tumbled 11.8%, the biggest percentage drop among S&P 500 companies, after a report that the cybersecurity company and Broadcom Inc (AVGO.O) have ceased deal talks. Broadcom shares rose 1.4%.

Shares of paper packaging companies Westrock Co (WRK.N), Packaging Corp of America (PKG.N) and International Paper Co (IP.N) shed between 1% and 3% after a downgrade from KeyBanc, which cited risks from a further fall in containerboard and pulp prices.

Declining issues outnumbered advancing ones on the NYSE by a 1.12-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored decliners.

The S&P 500 posted 63 new 52-week highs and two new lows; the Nasdaq Composite recorded 72 new highs and 55 new lows.

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