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Market Snapshot: Dow drifts despite good earnings as investors await tech heavyweight results

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Major U.S. stock benchmarks traded mixed Tuesday, a day after the S&P 500 index and Nasdaq Composite closed at records, as investors sifted through a torrent of corporate earnings reports and prepared for results from big technology firms.

What are major benchmarks doing?
  • The Dow Jones Industrial Average
    DJIA,
    +0.12%

    were off 12.20 points, or less than 0.1%, at 33,993.77.
  • The S&P 500
    SPX,
    +0.07%

    was off less than a point at 4,187.51.
  • The Nasdaq Composite
    COMP,
    -0.29%

    declined 44.28 points, or 0.3%, to 14,094.50.

On Monday, stocks ended mostly higher, with tech-related shares leading the move to the upside. The S&P 500 rose 0.2% and eclipsed its previous closing high from April 16 and the Nasdaq Composite jumped 0.9% to take it out its record finish from Feb. 12. The Dow stumbled, falling 0.2%.

What’s driving the market?

Corporate results for the first quarter were in the spotlight as one of the busiest weeks of the earnings reporting season got under way, with electric car maker Tesla Inc.
TSLA,
-4.09%

delivering its report late Monday afternoon. Tech results will be in the spotlight, with earnings for Microsoft Corp.
MSFT,
+0.20%

and Google parent Alphabet Inc.
GOOG,
-0.75%

GOOGL,
-0.86%

due after the closing bell Tuesday.

With about a third of S&P 500 index companies reporting so far, about 80% have beaten forecasts, according to FactSet.

But the strong results have not spurred big gains in equities as investors had largely priced in the rapid growth in profits. Rather, companies that showed they were capitalizing on the economic reopening and long-term changes in consumer behavior would benefit the most, said Lauren Goodwin, economist and portfolio strategist at New York Life Investments.

“We’ve reached a challenging part of the cycle, where strong reports are going to head-to-head with even stronger expectations. The message for investors is that a rising tide isn’t likely to raise all ships moving forward,” said Goodwin.

Need to Know: Don’t bail on stocks now, says world’s top fund manager

The Federal Reserve on Tuesday started its two-day policy meeting at which Fed Chairman Jerome Powell is expected to maintain his stance that interest rates won’t begin to rise until inflation exceeds the Fed’s 2% target.

Investors don’t expect the central bank to offer more substance on future plans to taper asset purchases, and to underline that the recovery still was in its early stages.

“Wall Street seems fixated on pricing pressures, especially after many corporate updates discuss supply chain problems and with rising expectations to pass on costs to customers,” Edward Moya, Senior Market Analyst, The Americas, at OANDA  wrote in a note Tuesday. “The overwhelming consensus is that pricing pressures will peak during the summer and if the Fed can hold onto that belief, a near zero interest rate environment might need to be priced much longer than what investors are currently thinking. ”  

Read: Why the Fed’s focus on those hardest-hit by the pandemic matters for markets

In U.S economic data, the Case-Shiller 20-city home price index jumped 11.9% in February from a year ago, the biggest increase in 15 years.

The Conference Board said its index of consumer confidence climbed to a 14-month high of 121.7 in April from a revised 109 in March.

Which companies are in focus?
What are other markets doing?
  • The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    rose 5 basis points to around 1.62%%. Yields and bond prices move in opposite directions.
  • The ICE U.S. Dollar Index
    DXY,
    +0.10%
    ,
    a measure of the currency against a basket of six major rivals, edged up 0.1%.
  • Oil futures remained higher as reports said OPEC+ would cancel a Wednesday meeting and stick with a timetable to ease production curbs, with the U.S. benchmark
    CL00,
    +2.07%

    rising $1.03, or 1.7%, to settle at $62.94 a barrel on the New York Mercantile Exchange. Gold futures
    GC00,
    -0.18%

    fell $1.30, or nearly 0.1%, to settle at $1,778.80 an ounce.
  • In global equity trading, the Stoxx 600 Europe index
    SXXP,
    -0.08%

    fell 0.2% and London’s FTSE 100 index
    UKX,
    -0.26%

    was off 0.3%. The Shanghai Composite
    SHCOMP,
    +0.04%

    ended fractionally higher, while Hong Kong’s Hang Seng Index
    HSI,
    -0.04%

    fell slightly and Japan’s Nikkei 225
    NIK,
    -0.46%

    fell 0.5%.

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