By Yasin Ebrahim

Investing.com – The S&P 500 slipped Tuesday, as investors had to contend with another day of wild swings just a day ahead of the start of quarterly earnings, and an update on inflation.

They fell 0.2%. The slipped 0.34% or 118 point, and the was down by 0.14%.

With just one day until the major Wall Street banks begin their quarterly earnings season, investors continued to hold onto their cash.

As the positive backdrop of rising interest rates supports the sector, banking stocks have risen 40% so far in the year.  

JPMorgan Chase & Co (NYSE:) reports third-quarter results Wednesday, followed by Citigroup (NYSE) – Wells Fargo Bank of America, Bank of America Morgan Stanley (NYSE:) Thursday.

The most closely monitored metrics will be loan growth. It has been in decline since the pandemic, and it is slow to recover.

The big tech sector traded mainly lower as it struggled to overcome the slow start of the week despite falling Treasury yields which are a threat to growth stocks.

Google-parent Alphabet, Apple (NASDAQ) and Facebook (NASDAQ) were among the reds while Amazon (NASDAQ) was in green.

Apple, meanwhile, said it plans to launch an event on Oct. 18, during which the company could unveil new MacBook laptops and AirPods headphones.

Tech was also dragged lower by fall in iShares Semiconductor ETF (NASDAQ:), paced by a decline in Micron Technology (NASDAQ:) on concerns about margin pressures in the memory-chip market amid supply chain woes.

After auction results showed that demand was strong, the rate fell to 1.6%.

Fed members remain concerned by above-trend inflation, ahead of Wednesday’s inflation report.

“Underlining inflation is indeed above the committees 2% objective,” Atlanta Federal Reserve President Raphael Bostic said Tuesday. “Severe and pervasive supply chain issues will probably last longer than initially expected.

Persistent inflation concerns are raised at a time when global growth is likely to slow. This increases investor fear of stagflation.

From 6.0% in July, the International Monetary Fund has reduced its global gross domestic products by 0.1% to 5.9%.

Expect the U.S. to announce Wednesday that September’s consumer price index grew by 5.3% over the previous 12 months. The sharp pace of inflation, however, will eventually fade as supply starts to catch up with strong demand.

“In the US, the growth slowdown has bottomed, the unemployment rate continues to decline, and much – though by no means all – of the surge in inflation will fade next year,” Morgan Stanley said. 

We find very little support for the theory in the outlook. [of US stagflation] and believe the role of demand is underappreciated,” it added.

The House in Washington is likely to approve the short-term $480 billion debt ceiling increase Tuesday. This will provide funding for the U.S. until December 1. To avoid defaulting by the U.S. on its debt, the legislative bill must be passed before Oct. 18.