Only four of the 11 major S&P 500 sector indexes were trading higher, with the technology sector (.SPLRCT) rising 1.1% to also hit a new peak, supported by heavyweights including Apple Inc (AAPL.O) and Microsoft Corp (MSFT.O).
Growth stocks also got a boost from a decline in the benchmark 10-year Treasury yield after data showed U.S. consumer prices rose by the most in 13 years last month, while the so-called core CPI surged 4.5% on a year-on-year basis, the largest rise since November 1991, after jumping 3.8% in May. read more
"The real question that is on everyone's minds is how long these hot inflation numbers will last," said Mike Loewengart, managing director of investment strategy at E*TRADE Financial.
"Every successive high inflation read will make it harder and harder for the Federal Reserve to remain accommodative."
Investors fear an overheating economy amid a faster reopening could force the Fed to pare back its ultra-loose monetary policies sooner than expected.
Economy-linked energy (.SPNY), financials (.SPSY) and materials (.SPLRCM) sectors were the biggest decliners, falling more than 1% each.
Rate-sensitive banks (.SPXBK) fell 2.0% even as JPMorgan Chase & Co (JPM.N) and Goldman Sachs Group Inc (GS.N) reported higher-than-expected quarterly earnings. JPMorgan suffered from a well-flagged slowdown from last year's record-breaking trading results. read more
PepsiCo Inc (PEP.O) gained 2.6% after raising its full-year earnings forecast, betting on accelerating demand as COVID-19 restrictions continue easing. read more
"We know that Q2 is going to be an incredible earnings season. The question is could we be at peak earnings growth and peak economic growth?" said Jon Adams, senior investment strategist at BMO Global Asset Management.
"Largely, the earnings strength is baked into equity valuations and if earnings continue to surprise on the upside, or elevated expectations, that should be positive for equities."
June-quarter earnings per share for S&P 500 companies are expected to rise about 66%, according to Refinitiv data, with market participants questioning how long Wall Street's rally would last after a near 17% rise in the benchmark index so far this year.
All eyes would now be on Fed Chair Jerome Powell's Congressional testimony on Wednesday and Thursday for his comments about rising price pressures and monetary support going forward.
At 12:05 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 21.92 points, or 0.06%, at 34,974.26, the S&P 500 (.SPX) was up 5.66 points, or 0.13%, at 4,390.29, and the Nasdaq Composite (.IXIC) was up 63.97 points, or 0.43%, at 14,797.21.
Conagra Brands Inc (CAG.N) slipped 4.3% after the packaged foods company warned that higher raw material and ingredient costs would take a bigger bite out of its profit this year than previously estimated. read more
Boeing Co (BA.N) fell 3.3% after the Federal Aviation Administration said late on Monday some undelivered 787 Dreamliners have a new manufacturing quality issue. read more
Declining issues outnumbered advancers for a 1.92-to-1 ratio on the NYSE and for a 2.17-to-1 ratio on the Nasdaq.
The S&P index recorded 39 new 52-week highs and no new low, while the Nasdaq recorded 54 new highs and 42 new lows. Reporting by Devik Jain and Shreyashi Sanyal in Bengaluru; Editing by Arun Koyyur and Maju Samuel