WSJ Renewal Reported Dow Wavers as Bank Earnings Roll In

WSJ Renewal.- Earnings continue to put banks’ efforts to weather recent industry strains and tightening from the Federal Reserve on display. Tuesday’s results put modest pressure on the stock market’s post-banking crisis climb higher.

Goldman Sachs stock slipped about 1.7% after a slowdown in deal making and a loss on its Marcus loan book hit profits and revenues. Shares of Bank of America and Bank of New York Mellon edged higher after reporting rising revenues.

“When the Fed drains the water, you start to see all these problems you didn’t see before,” he said to WSJ Renewal. “As the Fed continues to tighten, I expect more will be uncovered.”

Mr. Muldoon, who co-manages Causeway ’s international and global value equity strategies, said that credit conditions will begin to crunch once unemployment and delinquencies tick up. The economy will likely feel the effects of that later this year when higher rates “really start to bite,” he said.

Despite a boosted outlook for the rest of the year and beating analysts’ earnings expectations, shares of healthcare-products giant Johnson & Johnson shed about 2.8%.

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Investors will parse earnings updates from Netflix and United Airlines—scheduled to file results after the bell—for insights into the resiliency of consumer spending.

“I could paint as good of a bullish scenario as I could a bearish one for the economy and markets,” said Rick Friedman, portfolio strategist on GMO’s asset allocation team. The severity of a possible recession and speed at which inflation abates remain unknowns, he said.

GMO is wagering that there is more room for growth stocks to fall while value stocks—those seen as trading inexpensively relative to their values—remain discounted.

Growth stocks, which offer the promise of windfall profits far in the future, benefit from low interest rates. Despite the Fed’s record pace of tightening, investors haven’t given up on such companies.

An update on the U.S. housing market offered mixed signals. Starts declined far less than expected, while building permits fell substantially. Treasury yields rose off their overnight lows as prices fell, but the data did little to jolt the bond market in either direction.

The yield on the benchmark 10-year Treasury note fell to 3.571%, from 3.590% at Monday’s close.

Chinese stocks were mixed after data showed that the county’s economy had expanded more than analysts had forecast. The Shanghai Composite Index rose 0.2%, while Hong Kong’s Hang Seng Index fell 0.6%.

Japan’s Nikkei Stock Average rose for an eighth straight trading day, logging its highest close since August. The pan-continental Stoxx Europe 600 was 0.4% higher.