The Federal Reserve’s latest take on the U.S. economy put many investors into sell mode Tuesday, sending stocks mostly lower after a brief upward turn early in the day.
The major U.S. financial market indexes were up slightly in premarket trading as JPMorgan, Goldman Sachs and Johnson & Johnson released quarterly results that exceeded Wall Street’s expectations.
Separate reports on U.S. retail sales and manufacturing growth also gave the market an early lift.
But stock indexes diverged shortly after the market opened and then fully veered into the red about an hour into regular trading as investors began to tune into Fed Chair Janet Yellen delivering the central bank’s semiannual economic report to Congress.
Stocks finished the day mixed, with the Dow Jones industrial average eking out a tiny gain on the day: 5.26 points to close at 17,060.68. The index is down slightly from its July 3 record of 17,068.65.
The Standard & Poor’s 500 index fell 3.82 points to 1,973.28. The index is down 0.6 percent from its most recent all-time high of 1,985.44 set July 3.
The Nasdaq composite shed 24.03 points to 4,416.39.
Bond prices barely budged. The yield on the 10-year Treasury note held steady at 2.55 percent.
Yellen told Congress that the Fed intends to keep providing significant support to the U.S. economy to boost growth and improve labor market conditions, noting that the economic recovery is not yet complete.
Employers added 288,000 jobs last month, the fifth consecutive month of gains above 200,000. The national unemployment rate has slid to 6.1 percent, a 5½-year low.
Yellen noted that if labor market conditions continue to improve more quickly than anticipated, the Fed could raise its key short-term interest rate sooner than currently projected.
“In light of corporate earnings being good, retail sales being good, manufacturing being good, even a data-driven Fed chairman is going to have to raise rates earlier than the market really wants,” said Doug Cote, chief market strategist at Voya Investment Management. “So all the good fundamental data that should be good for the markets is also hawkish for rates.”
Beyond the Fed, investors are mostly focused on company earnings this week, including quarterly reports from Bank of America, eBay and Yum Brands today.