New York stocks ended lower on concerns about inflation from a surge in global oil prices and uncertainty over earnings for major corporations such as Tesla and Alphabet that were scheduled to be released after the close.
On the 22nd (local time) in New York, the Dow Jones Industrial Average finished down 6.06 points, or 0.01%, at 52,218.58. The Standard & Poor's (S&P) 500 index closed down 10.24 points, or 0.14%, at 7,498.96, and the tech-heavy Nasdaq composite ended down 146.30 points, or 0.57%, at 25,690.90.
Investors were cautious as large-cap tech stocks were set to report second-quarter results after the close.
After the New York close, Alphabet reported second-quarter revenue of $119.8 billion, beating market expectations. However, cash flow turned negative due to investments in AI infrastructure.
Tesla's revenue for the same period topped forecasts, but earnings per share (EPS) fell well short. As investments in the Autonomous Driving robotaxi ride-hailing service and artificial intelligence (AI) infrastructure increased, free cash flow turned to a deficit at negative $1.09 billion.
Geopolitical tensions in the Middle East also dampened investor sentiment. As U.S.-Iran tensions escalated, global oil prices rose for a fourth straight session.
On the day, September West Texas Intermediate (WTI) futures settled up 2.95% at $86.83 a barrel, while September Brent futures jumped 3.36% to $94.07 a barrel.
Rising oil prices heightened inflation worries and pushed up U.S. Government Bonds yields. The 10-year U.S. Treasury yield rose 3 basis points (1 bp = 0.01 percentage point) to 4.657%, and the 2-year U.S. Treasury yield rose 4 basis points to 4.301%.
The market is wary of a benchmark rate hike ahead of next week's Federal Open Market Committee (FOMC) meeting of the Federal Reserve (Fed).
According to the CME FedWatch, the probability that the Fed will raise the benchmark rate at its monetary policy meeting on the 28–29th rose from about 10% on the 16th to around 34% on the afternoon of the day.