By Chris Matthews and Anneken Tappe

Bank of America earnings beat expectations

Stocks put in a mixed performance Monday, as investors assessed the fallout from last week's equity-market rout, sparked in part by rising U.S. interest rates.

Despite better-than-expected earnings from Bank of America, the Charlotte-based bank also reported flat loan growth, while retail sales figures released Monday by the Commerce Department fell well below Wall Street expectations.

Need to know:Don't rule out $400 oil if U.S. sanctions Saudi Arabia (http://www.marketwatch.com/story/call-of-the-day-dont-rule-out-400-oil-if-the-us-sanctions-saudi-arabia-2018-10-15)

How are major benchmarks trading?

The Dow Jones Industrial Average was virtually flat at 25439.92 while the S&P 500 fell 6 points, or 0.2%, to 2,760.77. The Nasdaq Composite fell 53 points, or 0.7%, to 7,442.61.

On Friday, the Dow Jones Industrial Average finished the day up 287.16 points, or 1.2%, to 25,339.99, in whipsaw trading. The S&P 500 rose 1.4% to 2,767.13, snapping a six-day losing streak that marked its longest such streak since a nine-day drop that ended in November 2016. The Nasdaq Composite Index rose 2.3%, in its best daily performance since March 26.

But for the week, the Dow fell 4.2%, the S&P lost 4.1% and the Nasdaq shed 3.7%, representing their worst weekly performances since March.

Read:Here's how much damage has been done to the stock market during a powerful rout (http://www.marketwatch.com/story/heres-how-much-damage-has-been-done-to-the-stock-market-during-a-powerful-rout-2018-10-11)

What's driving the market?

Investors remain spooked after last week's two-day selloff that at its worst wiped 1,400 points off the Dow, and pushed the Nasdaq toward correction territory. Losses were tied to jitters over a sudden rise in interest rates, as the yield on the 10-year Treasury note hit a seven-year high above 3.25% last week. That yield was hovering at 3.15% on Monday.

See:Here's why stock-market investors suddenly freaked out over rising bond yields (http://www.marketwatch.com/story/stock-market-investors-are-right-to-be-frightened-by-rising-bond-yields-economist-2018-10-12)

Higher yields raise borrowing costs for corporations and lure investors away from perceived riskier asset such as stocks. Yields move inversely to price.

Seen as a major driver for stocks in the coming week, third-quarter earnings season gets under way in earnest this week, with Goldman Sachs Group Inc.(GS) among the big bank names reporting, while streaming video group Netflix Inc.(NFLX) will also be a highlight.

Netflix earnings:Was the streaming giant's second-quarter miss really just a blip? (http://www.marketwatch.com/story/netflix-earnings-was-the-streaming-giants-second-quarter-miss-really-just-a-blip-2018-10-11)

Geopolitical tensions were another worry for investors, starting with Saudi Arabia, which is locked in a growing diplomatic spat with the U.S. On Sunday, President Donald Trump threatened "severe punishment" for the Saudis if any connection was found between the kingdom and a missing dissident journalist. That country responded with an immediate threat to retaliate, sparking a rally for oil prices.

Those gains have been pared, however, as Trump appeared to soften his tone on the controversy Monday morning. The president tweeted on the subject, saying he had spoken to Saudi Arabia's King Salman, who denied any knowledge of what happened to the journalist, and that he would be sending Secretary of State Mike Pompeo to the country to meet with the king.

(https://twitter.com/realDonaldTrump/status/1051814214212485120)

Saudi backlash:More and more U.S. companies distance themselves from Saudi money (http://www.marketwatch.com/story/corporate-america-begins-to-distance-itself-from-saudi-money-due-to-khashoggi-affair-2018-10-11)

Need to know:Don't rule out $400 oil if U.S. sanctions Saudi Arabia (http://www.marketwatch.com/story/call-of-the-day-dont-rule-out-400-oil-if-the-us-sanctions-saudi-arabia-2018-10-15)

Investors are also parsing comments made in a "60 Minutes" interview (http://www.marketwatch.com/story/from-climate-change-to-china-to-kavanaugh-heres-what-trump-told-60-minutes-2018-10-14) Sunday night, when he threatened a third round of tariffs on China, which he said doesn't "have enough ammunition to retaliate."

And concerns resurfaced over a no-deal Brexit after the U.K. and the European Union failed to find a compromise (http://www.marketwatch.com/story/brexit-talks-face-setback-just-days-ahead-of-key-summit-2018-10-14)on the issue of the Irish border. Both sides were hoping a deal on a withdrawal agreement would be mostly settled ahead of an EU summit starting Wednesday.

Need to know:Don't rule out $400 oil if U.S. sanctions Saudi Arabia (http://www.marketwatch.com/story/call-of-the-day-dont-rule-out-400-oil-if-the-us-sanctions-saudi-arabia-2018-10-15)

What data are on tap?

U.S. retail sales rose 0.1% in September (http://www.marketwatch.com/story/late-summer-hangover-us-retail-sales-are-soft-for-the-second-month-in-a-row-2018-10-15), less than expected. Excluding car sales, the figure remained flat last month.

The Empire State Index meanwhile rose 2.1 points to 21.1 in October (http://www.marketwatch.com/story/empire-state-index-points-to-strong-factory-activity-in-october-2018-10-15), compared with 19 previously. Business inventories for August rose 0.5% (http://www.marketwatch.com/story/us-business-inventories-rise-sharply-again-in-august-2018-10-15).

What are analysts saying?

Investors should look to recent history if they want to know where markets are headed in coming weeks, said Thomas Martin, senior portfolio manager with GLOBALT Investments. He argued that the same factors that triggered February's stock market correction: fears over rising rates and inflation and a resultant shift from growth to value stocks--are those which led to last week's rout. But just as they did in late February and March, rates "have taken a big move back down," from last week's highs, he said. "We're now in a phase where markets are digesting these new levels, and if earnings continue to impress," another march higher similar to what happened in the spring could be in store.

Investors need two things to keep buying the dips in the stock market, said Hussein Sayed, chief market strategist at FXTM, in a note to clients.

"One, which is the most important, is corporate profits must remain robust and beat the 20% earnings growth projected for the third quarter while painting a rosy outlook for the quarters to come. Two, the U.S. and China need to cut a deal on trade, said Sayed. "If those two criteria aren't met, then stocks might have already peaked for 2018."

What stocks are in focus?

Bank of America Corp.(BAC) reported third quarter results that beat expectations (http://www.marketwatch.com/story/bank-of-america-profit-and-revenue-top-estimates-2018-10-15) ahead of the New York market open, showing earnings per share of 66 cents versus the consensus expectations of 62 cents. Shares were off 1.7%.

Shares of Sears Holdings Corp.(SHLD) dropped nearly 19% after the iconic retailer filed early Monday for bankruptcy protection (http://www.marketwatch.com/story/sears-files-for-chapter-11-bankruptcy-in-attempt-to-keep-stores-open-for-now-2018-10-15) from creditors. The chapter 11 filing comes after the company reached a deal with lenders that will allow it to keep hundreds of stores open for now.

Billionaire investor Carl Icahn on Monday disclosed he had boosted his stake (http://www.marketwatch.com/story/carl-icahn-to-oppose-dells-purchase-of-dvmt-tracking-shares-2018-10-15-61034053) in shares that track Dell Technologies Inc.'s(DVMT) interest in VMware Inc.(VMW) to 8.3%. In a letter, he said he plans to vote against Dell Technologies' plan to buy the stock. Shares of Dell Technologies rose 0.4%, while VMware shares shed 1.8%.

How are other markets trading?

Shares in Asia finished lower, failing to pick up the baton from the U.S. on Friday, led by a 1.9% drop for the Nikkei 225 index . Major European indexes were weaker across the board.

Crude-oil prices fell slightly after President Trump moved to ease U.S.-Saudi tensions (http://www.marketwatch.com/story/crude-prices-rise-on-growing-ussaudi-tensions-2018-10-15), while gold climbed 0.7%. The U.S. dollar index was down 0.2%.

(END) Dow Jones Newswires

October 15, 2018 12:24 ET (16:24 GMT)