U.S. stocks tick higher after Wall Street suffers back-to-back weekly losses

What’s driving markets

Stocks struggled in early trade as worries about China’s property sector weighed on appetite for risky assets around the world. Country Garden Holdings Co.
2007,
-18.37%,
China’s biggest home builder, saw its shares plunge to another record low on news it was suspending trading in some 11 of its mainland bonds. The news added to fears about the health of the world’s second-biggest economy and left Hong Kong’s Hang Seng
HK:HSI
down 1.7%.

“Right now, the world is ignoring the economic collapse in China and focusing on the economic recovery in the West,” said Louis Navellier, founder of Navellier & Associates, in a note.

See: Country Garden’s stock slumps 18% after Morgan Stanley downgrade and bond suspension

The S&P 500 has recorded two consecutive weeks of losses, shedding 2.6% in the process, after the rally in many big technology stocks such as Apple
AAPL,
+0.80%
and Nvidia
NVDA,
+4.80%
faltered.

Read: A stumbling stock market faces a crucial summer test. Here’s what will decide the bull’s fate.

Choppiness in the benchmark 10-year Treasury
BX:TMUBMUSD10Y
yield — which has moved to within several basis points of its highest level since the great financial crisis of 2008-09, partly on expectations of increased government issuance — has discouraged stock bulls.

Some market watchers argue that concerns over the path for inflation in the face of a recent backup in oil and fuel costs could set the stage for further consolidation or weakness for stocks.

“After an abysmal 2022, the S&P 500 has surged nearly 17% over the first two quarters of this year, retracing some of the losses sustained last year. However, in a market that seems to be pricing in perfection (i.e., inflation returning to 2% while the Fed orchestrates a soft-landing), the S&P 500 has been trading sideways over the past month,” said Jason Pride and Michael Reynolds, strategists at Glenmede, in a note.

With real-time inflation forecasting tools now calling for August inflation data to show a pickup due in part to rising energy costs, “current market levels and valuations do not appear commensurate with the outstanding risks,” they wrote.

Related: Why ‘stunning’ jump in jet fuel, diesel prices may complicate Fed’s inflation fight in months ahead

With more than 90% of the S&P 500 having reported, the second-quarter earnings season is starting to wind down, although retailers will be a feature in the coming days as Home Depot
HD,
-0.14%,
Target
TGT,
-0.79%
and Walmart
WMT,
-0.31%
present their numbers. July retail-sales data is due Tuesday morning.

Earnings Watch: Recession worries are fading. When Walmart and Target report, we’ll see how shoppers feel about that.

“Tuesday’s retail sales report will confirm if U.S. consumer demand remains strong.  Right now, the Atlanta Fed is estimating 4.1% annual third-quarter GDP growth, so growth expectations remain high,” Navellier wrote.

Companies in focus

• United States Steel Corp. 
  X,
  +29.14%
  shares surged 27.4% after Cleveland-Cliffs Inc.
  CLF,
  +6.47%
   announced Sunday it had made a $7.3 billion takeover bid that was rejected by the steelmaker’s board. Earlier Sunday, U.S. Steel said it was reviewing “strategic alternatives” after receiving multiple unsolicited acquisition proposals. Cleveland-Cliffs shares rose 5.3%.

• Shares of AMC Entertainment Holdings Inc.
  AMC,
  -33.56%
  slumped 33.7% after a Delaware court on Friday approved a revised, but still controversial, stock-conversion plan for the movie-theater chain. The ruling saw AMC preferred equity units
  APE,
  +16.85%
  jump 16.5%.

• Tesla Inc.
  TSLA,
  -1.78%
  shares fell 1.2% after the electric-vehicle maker cut the cost of two versions of its Model Y SUVs on Sunday.