S&P 500 and Nasdaq fall after hitting record highs

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The New York Stock Exchange is pictured in the Manhattan borough of New York City, New York, U.S., April 16, 2021. REUTERS/Carlo Allegri

  • JPMorgan drops amid low interest rates
  • U.S. consumer prices surge in June
  • Boeing slips on new production problems for 787 Dreamliners
  • Indexes: Dow -0.18%, S&P 500 -0.23%, Nasdaq -0.37%

July 13 (Reuters) - The S&P 500 and Nasdaq dropped on Tuesday after hitting record highs earlier in the session, with investors digesting a jump in consumer prices in June and earnings from JPMorgan and Goldman Sachs that kicked off the quarterly reporting season.

The S&P 500 and Nasdaq hit fresh record highs but quickly fell into negative territory after an auction of 30-year Treasuries showed less demand than some investors expected.

Data showed U.S. consumer prices rose by the most in 13 years last month, while so-called core consumer prices surged 4.5% year over year, the largest rise since November 1991. read more

Economists viewed the price surge, driven by travel-rated services and used automobiles, as mostly temporary, aligning with Federal Reserve Chair Jerome Powell's long-standing views.

"Any time you get an uptick in interest rates the stock market is going to get nervous, especially on a day like today," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. "The CPI said one thing and the bond auction said another."

Following the midday dip, the S&P 500 growth index (.IGX) was up 0.1%, outperforming the value index's (.IVS) 0.4% dip.

"With growth outperforming value, the takeaway is clearly that inflation from a market perspective is not a real threat in the long term," said Keith Buchanan, a portfolio manager at GLOBALT Investments in Atlanta, Georgia.

Most the 11 major S&P 500 sector indexes were down, with real estate (.SPLRCR) and financials both losing about 1%.

The S&P 500 banks index (.SPXBK) fell 1.2% after JPMorgan Chase & Co (JPM.N) reported blockbuster quarterly profit growth but warned that the sunny outlook would not make for blockbuster revenues in the short term due to low interest rates. read more

Goldman Sachs Group Inc (GS.N) fell 1% after its quarterly earnings exceeded forecasts. read more

PepsiCo Inc (PEP.O) gained 2.4% after raising its full-year earnings forecast, betting on accelerating demand as COVID-19 restrictions continue easing. read more

June-quarter earnings per share for S&P 500 companies are expected to rise 66%, according to Refinitiv data, with investors questioning how long Wall Street's rally would last after a near 17% rise in the benchmark index so far this year.

All eyes now turn to Fed Chair Jerome Powell's congressional testimony on Wednesday and Thursday for his comments about rising price pressures and monetary support going forward.

In afternoon trading, the Dow Jones Industrial Average (.DJI) was down 0.18% at 34,934.04 points, while the S&P 500 (.SPX) lost 0.23% to 4,374.33.

The Nasdaq Composite (.IXIC) dropped -0.37% to 14,678.71.

Conagra Brands Inc (CAG.N) dropped 5% after the packaged foods company warned that higher raw material and ingredient costs would take a bigger bite out of its profit this year than previously estimated. read more

Boeing Co (BA.N) fell 3% after the Federal Aviation Administration said late on Monday some undelivered 787 Dreamliners have a new manufacturing quality issue. read more

Declining issues outnumbered advancing ones on the NYSE by a 2.42-to-1 ratio; on Nasdaq, a 2.87-to-1 ratio favored decliners.

The S&P 500 posted 39 new 52-week highs and no new lows; the Nasdaq Composite recorded 58 new highs and 56 new lows.

Additional reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Cynthia Osterman

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