U.S. stock benchmarks struggled for direction Monday, hovering near records, as investors await earnings from corporate heavyweights, including from Big Tech this week and a Federal Reserve policy meeting.

The pipeline of earnings could set the tone, analysts said, but investors also will be focused China and the U.S., as tensions rise between the world’s top two economies.

What are major indexes doing?
  • The Dow Jones Industrial Average
    DJIA,
    +0.11%

    was up 21 points, or 0.1%, near 35,081, after flipping between small gains and losses.

  • The S&P 500
    SPX,
    +0.13%

    rose 3 points, or 0.1%, to 4,415.

  • The Nasdaq Composite
    COMP,
    -0.00%

    shed 13 points, or0.1%, at 14,824.

The decline came after a week that saw U.S. benchmarks bounce back sharply from a July 19 tumble to end Friday at records. The S&P 500 on Friday rose 2% to finish at its 40th record close of 2021, and the tech-heavy Nasdaq Composite rose 2.8%. The Dow also pushed to a record close Friday, finishing above the 35,000 milestone for the first time.

What’s driving the market?

U.S. stocks struggled for direction Monday, following a softer tone across global equity markets, as investors waited to hear from the C-suites of Big Tech companies about their expectations for the rest of 2021.

“It’s all about earnings this week,” said John Carey, director equity income at Amundi U.S., adding that investors will be glued to what company executives have to say about their expectations for the second half of this year.

“I think investors will also be especially attuned to anything management has to say about inflation, cost pressures and the margin outlook, as a result of potentially rising labor costs and other inputs,” he told MarketWatch.

Results are due this week from major tech companies including Alphabet Inc.
GOOG,
+0.66%

GOOGL,
+0.16%
,
Amazon.com Inc.
AMZN,
+1.33%
,
Apple Inc.
AAPL,
+0.60%
,
Facebook Inc.
FB,
+0.64%

and Microsoft Corp.
MSFT,
-0.30%
.

“The earnings season is now in full throttle and thus far continues to surprise to the upside, as most companies are reporting better than expected top and bottom-line results,” said Peter Cardillo, chief market economist at Spartan Capital Securities, in a note.

“Despite the ‘fear factor’ over the virus, and a lasting inflation which at times may cause minor hiccups, we see the summer rally continuing with the indices possibly headed higher by another 5%,” he said.

Earnings Preview: Apple, Microsoft, Google, Facebook, Amazon and Tesla headline the biggest week of earnings

The U.S. earnings calendar also includes electric-vehicle maker Tesla Inc.
TSLA,
+3.51%
,
which reports after the close on Monday. This week also will see the latest Federal Reserve interest-rate decision and the gross domestic product report for the second quarter.

Don’t miss: Stagflation is ‘a legitimate risk’ that would be painful for U.S. markets

The Fed meets Tuesday and Wednesday. Policy makers are expected to discuss plans around eventually slowing the pace of the Fed’s monthly bond purchases. But investors expecting clear answers about the crucial questions of when the tapering will start and the pace of any pull back will likely be disappointed, economists said.

See: Fed to tiptoe toward tapering this week

Global stocks in Europe and the U.K. closed modestly lower, while the Hang Seng
HSI,
-4.13%

skidded over 4%, following a crackdown by China both on Tencent’s music licensing and the entire educational tutoring industry. Tencent Music Entertainment
TME,
-3.43%

shares were off about 4.5% after dropped as much as 14% in premarket action.

U.S. government data on Monday showed U.S. new home sales fell 6.6% in June to an annual rate of 676,000, the lowest since the first month of the COVID-19 pandemic in early 2020, as high prices and a limited selection appeared to frustrate would-be buyers.

Also read: Goldman Sachs trims U.S. growth outlook due to weaker service sector

Which companies are in focus?
  • Shares of Hasbro Inc.
    HAS,
    +12.25%

    rose 12.9% after the toy maker reported a second-quarter adjusted profit that was more than double what was expected, with revenue lifted by strength in franchise brands and Wizards of the Coast and digital gaming.

  • Aon PLC
    AON,
    +10.43%

    and Willis Towers Watson PLC
    WLTW,
    -8.71%

    on Monday announced a mutual agreement to terminate their $30 billion merger deal and end litigation with the U.S. Justice Department. Aon shares rose 10%, while Willis Towers Watson was off 8.1%.

  • Popular meme stock AMC Entertainment Holdings Inc.
    AMC,
    +8.20%

    rose 7%, on track to halt a three-day losing streak, while GameStop Corp.
    GME,
    +1.57%

    edged up 0.2%.

  • Otis Worldwide Corp.
    OTIS,
    +0.55%

    shares were 0.7% higher after the maker of elevators and escalators reported second-quarter profit and sales that rose above expectations, with particular strength in its new equipment business, while also raising its full-year outlook.

  • Lockheed Martin Corp.
    LMT,
    -3.32%

    shares fell 3.2% after the aerospace and defense contractor reported a second-quarter profit that came up shy of expectations, amid performance issues in aeronautics, though revenue topped forecasts.

What are other markets doing?

Steven Goldstein contributed reporting



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