US stocks edge higher as investors assess economic growth and inflation risks

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US stocks edge higher as investors assess economic growth and inflation risks
Traders Aaron Ford, left, and John Panin work on the floor of the New York Stock Exchange. AP Photo/Richard Drew
  • Stocks moved modestly higher Tuesday after growth and inflation concerns sparked a retreat Monday.
  • The IMF trimmed its 2021 growth outlook, citing broken supply chains and continued pandemic stress.

US stocks gained modestly Tuesday following a selloff in the previous session but investors remain on alert for developments that highlight concerns about slowing economic growth and a run-up in inflation.

All three of Wall Street's main benchmarks rose after Monday's slide that brought the Dow industrials down by 250 points. The indexes clung to small gains Tuesday as the International Monetary Fund reduced its 2021 global growth forecast to 5.9% from 6% as advanced economies grapple in part with supply disruption.

The IMF's lower outlook arrived as investors prepare for the third-quarter earnings season to kick off, with JPMorgan & Chase's report due Wednesday. As earnings start to roll in, US market-based inflation expectations are near their highest since the beginning of the subprime crisis in 2008.

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Here's where US indexes stood at 9:30 a.m. on Tuesday:

Bank of America has called the upcoming earnings season a "make or break" one for investors as companies have already flagged issues surrounding supply chain bottlenecks and rising labor costs.

"As we head into earnings season and expect to hear endless commentary about supply chain disruptions, inflationary pressures, and labor shortages, there were some encouraging comments on the subject over the last 24 hours," said Bespoke Investors Group, on Tuesday.

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"For starters, JP Morgan CEO Jamie Dimon said he feels as though supply chain issues won't be a problem "next year at all." Both Intel and Samsung have also said they expect their plants in Ho Chi Minh city to resume full operations by the end of November, said Bespoke.

Around the markets, investors poured the most cash into bitcoin-backed products in seven months as the cryptocurrency rallied past $50,000 last week, according to CoinShares.

The state of Alaska, one of the surprise winners from the GameStop short squeeze in January, cashed out most of its profit from its bet on the video-game retailer last quarter.

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Gold rose 0.5% to $1,762.62 per ounce.

Oil prices rose. West Texas Intermediate crude picked up 0.3% to $80.75 per barrel. Brent oil, oil's international benchmark, edged up 0.1% to $83.76.

Bitcoin fell 0.8% to $56,926.35.

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