(Reuters) – Wall Street’s main indexes dipped on Thursday, hit by a drop healthcare shares, but gains in financials ahead of big bank earnings helped limit losses.
The S&P financial index rose 0.54%, while the banking sector was up 0.36%.
JPMorgan Chase & Co and Wells Fargo & Co will kick off what is expected to be a tough quarterly earnings season for banks on Friday.
Earnings of S&P 500 bank are expected to grow 1.8% in the first quarter, well below 8.2% estimated six months ago, according to Refinitiv data. The steep drop in the estimate comes in the wake of the Federal Reserve’s dovish tilt and the subsequent drop in 10-year Treasury yields.
“We are in a week that kicks off earnings season, it is not unusual for the markets to turn sideways until we start things off and get an idea of what the first quarter is going to look like,” said Art Hogan, chief market strategist at National Securities in New York.
The S&P 500 is hovering near its six-month high and is just 1.7% away from its record high touched in late September.
Minutes from the Federal Reserve’s March meeting on Wednesday showed that it was likely to leave interest rates unchanged this year given risks to the U.S. economy from the slowdown and uncertainty over trade policies and financial conditions.
The European Central Bank also maintained its loose policy stance, raising the prospect of more support being pumped into the struggling euro zone economy.
Concerns about trade and financial conditions have pushed central banks to take a dovish stance, broadly supporting the appetite for risky assets.
“The market is relieved about the Fed not acting on interest rates and is now looking forward to the earnings season which is not going to be a good one in comparison,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
Investors shrugged off inflation data, after a Labor Department report showed U.S. producer prices increased by the most in five months in March, but underlying producer prices remained soft.
At 11:51 a.m. ET, the Dow Jones Industrial Average was down 58.03 points, or 0.22%, at 26,099.13, the S&P 500 was down 3.48 points, or 0.12%, at 2,884.73 and the Nasdaq Composite was down 15.38 points, or 0.19%, at 7,948.86.
The S&P healthcare sector fell 0.79%, dragged down by losses of more than 1% in UnitedHealth Group Inc and Merck & Co. The Nasdaq Biotech index fell 1.29%.
Industrial stocks got a boost from Fastenal Co’s 5.5% rise after the industrial supplier reported first-quarter profit that beat estimates.
Bed Bath & Beyond Inc shares tumbled 7.6% after the home furnishing retailer forecast weak current-quarter profit.
Tesla Inc shares dropped 2.9% after the electric carmaker and Panasonic Corp said they were holding off on further investment in Tesla’s Nevada Gigafactory.
Advancing issues outnumbered decliners by a 1.29-to-1 ratio on the NYSE and by a 1.11-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and one new low, while the Nasdaq recorded 52 new highs and 18 new lows.