Dow drops for second day as stocks struggle to recover from earnings beats
U.S. stocks were under pressure for the second session on Tuesday, as concerns about rising coronavirus cases around the world offset good results from U.S. companies for the first quarter.
What are the main indexes doing?
The Dow Jones Industrial Average DJIA,
fell 305.09 points, or 0.9%, to 33,772.54.
The S&P 500 SPX,
fell 32.62 points, or 0.8%, to 4,130.64.
The Nasdaq Composite COMP,
loses 143.30 points, or 1%, to trade at 13,771.46.
The Russell 2000 RUT small cap,
On Monday, stocks suffered modest losses, with the Dow Jones dropping 123.04 points, or 0.4%, while the S&P 500 fell 0.5% as both indices retreated from records released on Friday. The Nasdaq Composite lost 1%.
What drives the market?
While most companies beat first quarter profit estimates in the first week of the quarterly reporting season, stocks were taking a break after hitting record highs last week.
“Stocks are falling again today without clear catalysts. Markets are a bit tight at this point, so we might see stocks pull back a bit here and there. This is normal, and we expect any downside to be bought up quickly, ”said Callie Cox, senior investment strategist at Ally Invest.
Earnings reports, which got off to a good start for the quarter, will remain watched as investors assess the strength of the economic recovery from the COVID-19 pandemic, analysts said. Advice from companies on the outlook for the coming year can be even more important in determining market direction.
“The business outlook may indicate whether the rally from last year’s low may continue,” Charalambos Pissouros, senior market analyst at JFD Group, said in a note.
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“In our view, with most of the major central banks suggesting that any spike in inflation this year is likely to be temporary, and in remaining committed to keeping their monetary policies looser, we believe that while earnings are disappointing somewhat, there is has a decent chance for stocks to rebound again and continue to move north, ”he said.
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However, a pick-up in new COVID-19 cases around the world is dampening sentiment, analysts said. The World Health Organization has warned that global coronavirus infections are reaching their highest pandemic level.
The global daily tally of new cases nearly hit a record high of more than 750,000 on Sunday and Monday, according to the Washington Post, as India and Brazil remain hot spots. The United States has recorded an average of 67,175 new cases per day over the past week, up 4% from the average of two weeks ago, but about 50% of American adults have now received an vaccine injection.
See: Why spike in COVID-19 cases keeps Morgan Stanley bullish on risky assets
“There are growing concerns that the spread of COVID outside the United States is hampering the global economic recovery and obstructing the advice of US companies in their reporting, especially multinationals,” said Fiona Cincotta, senior market analyst financial at City Index, in a note.
Which companies are targeted?
launched a new iMac and iPad with its M1 chips at a spring event on Tuesday. Apple shares fell 1.5%.
Actions of International Business Machines Corp.
rose 3.8% after the tech giant topped Wall Street estimates with a surprise increase in revenue, breaking a four-quarter streak of declining sales.
United Airlines Holdings Inc.
lost more than $ 1.3 billion in the first three months of 2021, but executives said an adjusted cash flow measure turned positive and promised new international routes to countries allowing travelers vaccinated will help the airline recover from the devastation of the COVID-19 pandemic. The shares fell more than 9%.
Johnson & johnson
On Tuesday, first-quarter profits and sales beat expectations, citing the strength of its pharmaceutical business and the continued recovery of medical devices. Shares rose 3.1%.
Actions of Abbott Laboratories
were down 3.6%, despite the company’s results exceeding profit expectations in a quarter in which sales of its COVID-19 tests represented 20% of total revenue .
Actions of Procter & Gamble Co.
rose 0.9% after the consumer staples maker reported higher than estimated third-quarter tax profits and said it would raise prices for certain product categories.
Actions of Kansas City South
climbed 16.2%, after The Wall Street Journal reported this Canadian National Railway Company
planned to make a buyout offer for the rail operator of around $ 30 billion, which would exceed Canadian Pacific Railway Ltd.
previously agreed on the takeover offer.
Actions of Philip Morris International Inc. PM rose 2.6% after the cigarette seller reported better than expected first quarter profit and revenue, as growth in heated tobacco unit shipments helped offset lower shipments of cigarettes.
See: Tobacco stocks collapse after signaling Biden administration may demand nicotine cuts
What are other markets doing?
The yield of the BX 10-year Treasury bill: TMUBMUSD10Y
fell 4 basis points to 1.56%, after a recent short hedging rally that saw yields retreat from 14-month highs. Bond yields and prices move in opposite directions.
The ICE US Dollar DXY index,
a measure of the currency against a basket of six big rivals, rose 0.2%.
Oil futures edged up, with the US benchmark CLM21,
up 1.4% to $ 62.50 a barrel.
GC00 Gold Futures,
cleared early weakness to push higher, gaining $ 7.90, or 0.5% to settle at $ 1,777.30 an ounce.
In Europe, the Stoxx 600 SXXP,
fell 1.9% and London’s FTSE 100 UKX,
finished down 2%.
In Asia, the Hong Kong Hang Seng HSI index,
rose 0.1%, while the Shanghai Composite SHCOMP,
fell 0.1% and Japan’s Nikkei 225 NIK,