NEW YORK (AP) — U.S. stocks are nearing record levels on Monday, ahead of a week in which earnings reports from the nation’s largest retailers could provide a clue about how shoppers are coping with high inflation and a slowing labor market. The S&P 500 fell 0.1% but remains near its all-time high set on Thursday. The Dow Jones Industrial Average was down 163 points, or 0.3%, as of 10:30 a.m. ET, and the Nasdaq Composite was virtually unchanged. Wall Street has hit records largely because profits at big American companies are booming. According to FactSet, those in the S&P 500 Index are on track to generate roughly 50% growth in earnings per share in the spring from a year ago. That’s much better than analysts expected and would be the best since five years ago, when the economy was emerging from the abyss created by the COVID pandemic. Nearly all of the S&P 500 companies have already filed their spring earnings reports. Large retailers are still to come, including next week’s reports from Home Depot, Target and Walmart. They are facing pressure. Your clients’ income may be becoming more dubious after American employers surprisingly eliminated more jobs last month than they added. At the same time, their customers continue to see bills rise rapidly as inflation remains much higher than anyone would like. A report last week said shoppers surprisingly spent less at U.S. retailers last month than they did in June, and retailer CEOs could provide color this week on what they’re seeing. Meanwhile, the wait continues for what the war with Iran will do to oil prices. The price of a barrel of Brent crude rose 0.4% to $88.87 on Monday in what is considered a relatively modest move compared to its recent choppy swings. Brent fluctuated between $72 and $102 last month as hopes rose and fell that the United States and Iran could reach a deal that would allow oil tankers to freely leave the Persian Gulf again. In the bond market, Treasury yields rose slightly after their recent big moves. The 10-year Treasury yield rose to 4.70% from 4.68% last Friday following a report showing stronger-than-expected growth in the manufacturing sector in New York state. The 10-year yield has soared from 3.97% before the war with Iran, largely because higher oil prices increased pressure on inflation and increased the likelihood that the Federal Reserve will have to raise interest rates. Subscribe to Morning Wire: Our flagship newsletter breaks down the day’s biggest headlines. Higher rates might contain inflation, but they do so by intentionally slowing the economy and making it more expensive for everyone to borrow money. The average long-term mortgage rate in the United States has already approached its highest level in a year due to the rise in the 10-year Treasury yield. However, reports last week showed that inflation last month was not as bad as earlier in the summer. That raised hopes that the Federal Reserve could wait until the end of the year before having to decide whether to raise its main interest rate. On Wall Street, trading was relatively calm. L3Harris Technologies fell 3.2% after the defense company said Christopher Kubasik resigned as CEO and president following “certain conduct by Kubasik that was inconsistent with the company’s values.” It gave few details but said the conduct was not related to its financial reporting, controls, customer relationships or operational performance. Alphabet fell 0.7% even though Berkshire Hathaway said it increased its investment in Google’s parent company, along with several homebuilders. Berkshire built a reputation for buying stocks at affordable prices under the leadership of its former CEO, famed investor Warren Buffett. Constellation Brands fell 4.8% after Berkshire said it sold all of its stakes in Modelo beer and wine seller Robert Mondavi. In foreign stock markets, indices fell in Europe after a stronger close in Asia. Tokyo’s Nikkei 225 rose 0.7% after a report said Japan’s economy grew at a slower pace in the April-June quarter than economists expected. Indexes rose 1.3% in Hong Kong and 1.4% in Shanghai during some of the world’s biggest moves.___AP business writers Yuri Kageyama and Michelle Champan contributed to this report.___Previous versions of this story incorrectly reported that Japan’s economy grew slightly faster than expected in the April-June quarter.
