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Wall St slips as bond yields surge, BofA gains on strong earnings

U.S. stocks fell on Monday as bond yields surged to three-year highs on expectations of an aggressive tightening in monetary policy, while financials rose after Bank of America rounded out earnings for big Wall Street banks with a profit beat.


Market participants are bracing for a barrage of earnings this week that will help them assess the impact of the Ukraine war and a spike in inflation on company financials.


The broader S&P 500 banks index .SPXBK rose 1.2%, lifted by a 3% gain in shares of Bank of America Corp BAC.N.


The second-largest U.S. bank by assets BAC.N reported strong growth in its consumer lending business, although its investment banking unit took a hit from a slowdown in deal-making.


“The earnings season so far has been living up to its expectations,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.


“There have been some negative guidance but, at large, it looks like corporate America is likely to be able to live with higher inflation and the higher cost of money.”


Market response to bank earnings has been mixed as JPMorgan Chase & Co JPM.N, Goldman Sachs Group Inc GS.N and Citigroup Inc C.N have set aside a combined $3.36 billion to cover loan losses due to risks from the Ukraine war and rising inflation.


Earnings of Netflix NFLX.O, Tesla TSLA.O Johnson & Johnson JNJ.N and International Business Machines IBM.N will be in focus as they are scheduled to report later this week.


Megacap stocks such as Apple AAPL.O and Amazon.com AMZN.O slipped as the benchmark 10-year Treasury yield US10YT=RR climbed to 2.850%, after hitting 2.884% earlier on Monday, the highest since Dec. 2018.US/


Shares of market-leading technology and growth companies have come under pressure recently as expectations of a string of interest rate hikes threaten to erode their future earnings.


Tesla, however, rose 1.2% as it prepares to reopen its Shanghai plant following a near three-week COVID shutdown.


Eight of the 11 major S&P sectors were lower. Defensive healthcare .SPXHC fell more than 1% after rallying to record highs this month amid concerns about slowing economic growth.


Energy stocks .SPNY rose 0.9% as crude prices rose and Brent topped $113 a barrel, as outages in Libya deepened concern over tight global supply. O/R


Overall, trading volumes were thin after the Easter break, with European markets remaining shut on Monday.


At 11:46 a.m. ET, the Dow Jones Industrial Average .DJI was down 77.55 points, or 0.23%, at 34,373.68, the S&P 500 .SPX was down 10.35 points, or 0.24%, at 4,382.24, and the Nasdaq Composite .IXIC was down 63.22 points, or 0.47%, at 13,287.86.


Charles Schwab Corp SCHW.N fell 8.6% after the financial services company missed quarterly profit estimates.

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