S&P 500, Nasdaq subdued on recession fears; Boeing lifts Dow Jones

PepsiCo rises on upbeat revenue forecast; Gap slides on CEO exit, outlook; Boeing jumps as deliveries reach highest monthly level in 3 years

The S&P 500 and the Nasdaq struggled for direction on Thursday as worries that Federal Reserve policy tightening could trigger a recession hurt sentiment ahead of the start of earnings season, while a rise in Boeing kept the Dow afloat.

Focus is now on inflation data on Wednesday that is expected to show U.S. consumer prices rose 8.8% in June from a year earlier, marking a fresh four-decade high and adding more pressure on the Fed to tame soaring prices.

Analysts are also tempering their profit estimates as the earnings season kicks off in earnest this week, with results from JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, among others.

"Investors will focus on margins, which is how are companies digesting all of the cost increases from wages to transportation to raw materials and for certain sectors, the questions will be how are companies seeing the broader consumer picture," said Ross Mayfield, investment strategy analyst at Baird.

"It is a continued risk off tone in markets and the anticipation that while maybe some of the pain is priced in, you still have inflation expected to accelerate tomorrow, and the Federal Reserve with a lot of room to go on rate hikes." A stronger-than-expected jobs report last week cemented expectations for a second straight 75-basis-point rate hike later this month. Investors will be watching out for speeches by Fed officials this week for any change in the central bank's hawkish stance on inflation.

All three benchmark indexes ended lower in the previous session, after posting solid gains last week, with most market-leading growth stocks yet again dragging down the Nasdaq on Tuesday.

The Dow Jones Industrial Average got a lift from a 7.6% jump in shares of Boeing Co, which delivered 51 airplanes in June, exceeding the 50 threshold for the first time since March 2019.

At 12:06 p.m. ET, the Dow was up 95.54 points, or 0.31%, at 31,269.38, the S&P 500 was up 3.35 points, or 0.09%, at 3,857.78 and the Nasdaq Composite was up 9.78 points, or 0.09%, at 11,382.38.

The benchmark U.S 2/10 yield curve remained inverted for a fifth consecutive day, further adding to fears of a recession.

The S&P 500 energy sector fell 2.2%, and was the top sectoral decliner, as oil prices retreated sharply on a weaker demand outlook. Airline stocks rose, with the S&P 1500 Airlines index up 6.6%.

PepsiCo Inc raised its full-year revenue forecast, helped by sustained demand for its sodas and snacks, sending the company's shares up 0.2%.

Gap Inc slid 3.7% after the clothing retailer said its CEO would step down and its margins would stay under pressure in the second quarter as costs spiral.

Advancing issues outnumbered decliners by a 1.67-to-1 ratio on the NYSE and a 1.13-to-1 ratio on the Nasdaq.

The S&P index recorded one new 52-week high and 29 new lows, while the Nasdaq recorded eight new highs and 99 new lows.