North American stocks were down in midday trading on Monday, ahead of the start of the U.S. second quarter earnings season,
At noon, the Dow Jones industrial average was down 66 points or 0.5 per cent, to 12,706. The broader S&P 500 was down 6 points or 0.4 per cent, to 1249. In Canada, the S&P/TSX composite index was down 72 points or 0.6 per cent, to 11,588.
The declines follow concerns in Europe, where rising bond yields have again signalled growing concerns about the borrowing costs within countries like Italy and Spain. The yield on Spain’s 10-year government rose above 7.1 per cent earlier in the day, before settling back slightly below 7 per cent, up 11 basis points. The yield on Italy’s 10-year bond rose to 6.1 per cent, up 8 basis points. There are 100 basis points in a percentage point.
European stocks moved lower. Germany’s DAX index fell 0.4 per cent and the U.K.’s FTSE 100 fell 0.6 per cent.
Within the S&P 500, the declines were widespread, affecting nine of the 10 subindexes. Commodity producers were the hardest hit, with energy stocks down 0.9 per cent and materials down 0.8 per cent. Technology stocks fell 0.7 per cent and financials fell 0.5 per cent. Health care stocks showed the only gains, rising 0.3 per cent.
The U.S. second quarter earnings season kicks off after markets close, when Alcoa Inc. reports its results. Expectations are low: Bloomberg News reported that analysts expect earnings for companies within the S&P 500 to fall 1.8 per cent over last year, marking the first earnings contraction since 2009.
Within Canada’s benchmark index, materials fell 1 per cent and energy stocks fell 0.6 per cent, marking a contrast with commodities themselves: Crude oil rose to $85.40 (U.S.) a barrel, up 95 cents. Gold rose to $1,588 an ounce, up $4. Meanwhile, financials fell 0.5 per cent.