By David French
(Reuters) - U.S. stocks closed lower on Monday after a session which saw all three benchmarks slip between positive and negative territory, as investors contrasted Bank of America's positive earnings with surging bond yields ahead of further earnings cues this week.
Market participants are bracing for a barrage of earnings that will help them assess the impact of the Ukraine war and a spike in inflation on company financials. Netflix, Tesla, Johnson & Johnson and International Business Machines are all to report this week.
Trading volumes were thin after the Easter break: 10.35 billion shares changed hands, compared with the 11.79 billion average for the full session over the last 20 trading days.
With European markets also remaining shut on Monday, this listless trading contributed to the topsy-turvy session.
"The market is looking for some direction. Do we get it from earnings - maybe. But the overarching factors continue to be what does China look like with its zero-COVID policy, and what does the Fed look like going forward in terms of interest rates and inflation," said Jack Janasiewicz, portfolio manager and lead portfolio strategist at Natixis Investment Managers.
"It's going to be some time before either one gives us any clear direction. With that backdrop, I'm not shocked if we just continue to trade in a range."
Bank of America rounded out earnings season for the big Wall Street banks, reporting strong growth in its consumer lending business, although its investment banking unit took a hit from a slowdown in deal making.
Its share price rose 3.4%, while the broader S&P 500 banks index also gained 1.7%.
Apple Inc slipped 0.1% as the benchmark 10-year Treasury yield climbed to 2.86%, after hitting 2.884% earlier on Monday, the highest since Dec. 2018.
Shares of market-leading technology and growth companies have come under pressure as expectations of a string of interest rate hikes threaten to erode their future earnings.
Tesla, however, rose 2% as it prepares to reopen its Shanghai plant following a near three-week COVID shutdown.
Five of the 11 major S&P sectors were higher, led by the energy index which advanced 1.5%. Crude prices gained and Brent topped $114 a barrel at one point on outages in Libya deepening concerns over tight global supply.
Among the best performers was Marathon Petroleum Corp, which gained 3.3% to hit a second lifetime high in three sessions. Valero Energy Corp and Phillips 66 both advanced 5.2%.
The Dow Jones Industrial Average fell 39.54 points, or 0.11%, to 34,411.69, the S&P 500 lost 0.9 points, or 0.02%, to 4,391.69 and the Nasdaq Composite dropped 18.72 points, or 0.14%, to 13,332.36.
Charles Schwab Corp fell 9.4%, its biggest one-day drop since March 2020, after the financial services company missed quarterly profit estimates.
Twitter rose 7.5% as the micro blogging site adopted "poison pill" on Friday to restrict Tesla CEO Elon Musk from raising his stake to beyond 15% for a one-year period.
Didi Global Inc slumped 18.3% after the Chinese ride hailing company said it will hold an extraordinary general meeting on May 23 to vote on its delisting plans in the United States.
The S&P 500 posted 27 new 52-week highs and 24 new lows; the Nasdaq Composite recorded 59 new highs and 397 new lows.
(Reporting by Bansari Mayur Kamdar, Sruthi Shankar and Amal S in Bengaluru and David French in New York; Editing by Arun Koyyur, Anil D'Silva and Grant McCool)