U.S. stocks fell for a second session on Tuesday, as concerns about rising coronavirus cases globally offset healthy U.S. corporate earnings reports for the first quarter.
What did major indexes do?
The Dow Jones Industrial Average
fell 256.33 points, or 0.8%, to finish at 33,821.30.
The S&P 500
fell 28.32 points, or 0.7%, to close at 4,134.94.
The Nasdaq Composite
shed 128.50 points, or 0.9%, to end at 13,786.27.
The small-cap Russell 2000
On Monday, stocks suffered modest losses, with the Dow shedding 123.04 points, or 0.4%, while the S&P 500 fell 0.5% as both indexes pulled back from record finishes posted Friday. The Nasdaq Composite shed 1%.
What drove the market?
While most companies were beating estimates for first quarter earnings in the first week of the quarterly reporting season, stocks were taking a breather after ending at records last week.
Stocks likely to benefit from the economic recovery and the resumption of travel were hit, with United Airlines
and American Airlines
both down Tuesday. The U.S. State Department on Monday urged Americans reconsider any international travel they may have planned and said it would issue specific warnings not to visit roughly 80% of the world’s countries due to risks from the coronavirus pandemic.
“Stocks are dropping again today with no clear catalysts. Markets are a little stretched at this point, so we may see stocks take a small step back here and there. That’s normal, and we’d expect any dip to be bought quickly,” said Callie Cox, senior investment strategist for Ally Invest.
Earnings reports, which are off to a strong start for the quarter, were under scrutiny as investors gauge the strength of the economic recovery from COVID-19 pandemic, analysts said. Guidance from companies on the outlook for the year ahead may be even more important in determining the market’s direction.
“Corporate outlooks may indicate whether the rally from last year’s low could continue,” said Charalambos Pissouros, senior market analyst at JFD Group, in a note.
“In our view, with most major central banks suggesting that any spikes in inflation this year are likely to prove to be temporary, and staying committed to keeping their monetary policies extra loose, we believe that even if the earnings disappoint somewhat, there is a decent chance for equities to rebound again and continue trending north,” he said.
However, a pickup in new COVID-19 cases globally is putting a damper on sentiment, analysts said. The World Health Organization warned that global coronavirus infections were edging toward their highest level in the pandemic.
The global daily new case tally almost hit a record of more than 750,000 on Sunday and Monday, according to the Washington Post, as India and Brazil remain hot spots. The U.S. has averaged 67,175 new cases a day in the past week, up 4% from the average two weeks ago, but about 50% of U.S. adults have now received one shot of vaccine.
“Concerns are rising that the spread of COVID outside of the U.S. could hinder the global economic recovery and drag on guidance from U.S. companies as they report — particularly multinationals,” said Fiona Cincotta, senior financial markets analyst at City Index, in a note.
Which companies were in focus?
launched a new iMac and iPad with its M1 chips at a spring event Tuesday. Appleshares fell 1.3%.
Shares of International Business Machines Corp.
gained 3.8% after the tech giant topped Wall Street estimates with a surprise rise in revenue, snapping a four-quarter streak of sales declines.
United Airlines Holdings Inc.
lost more than $1.3 billion in the first three months of 2021, but executives said that an adjusted cash flow metric flipped to positive and promised that new international routes to countries that allow vaccinated travelers will help the airline recover from the devastation of the COVID-19 pandemic. Shares fell over 8%.
Johnson & Johnson
on Tuesday reported first-quarter profit and sales that topped expectations, citing strength in its pharmaceutical business and continued recovery in medical devices. Shares rose 2.3%.
Shares of Abbott Laboratories
slipped 3.6%, despite the company delivering results that beat earnings expectations during a quarter in which sales of its COVID-19 tests made up 20% of total revenue.
Shares of Procter & Gamble Co.
closed up 0.8% after the maker of consumer staples reported fiscal third-quarter earnings that beat estimates and said it would be raising prices on certain product categories.
Shares of Kansas City Southern
soared 15.3%, after The Wall Street Journal reported that Canadian National Railway Co.
was planning to make a buyout bid for the railroad operator of roughly $30 billion, which would top Canadian Pacific Railway Ltd.’s
previously agreed on buyout bid.
- Shares of Philip Morris International Inc. PM rose 2.5% after the cigarette seller reported first-quarter profit and revenue that beat expectations, as growth in heated tobacco units shipments helped offset declines in cigarette shipments.
What did other markets do?
The yield on the 10-year Treasury note
fell 4 basis points to around 1.56%, after a recent short-covering rally saw yields retreat from 14-month highs. Yields and bond prices move in opposite directions.
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was up 0.2%.
Oil futures gave up their gains to reverse lower on prospects of diminished Indian demand, with the U.S. benchmark
falling 76 cents, or 1.2%, to settle at $62.67 per barrel.
erased early weakness to move higher, rising $7.80, or 0.4%, to settle at $1,778.40 an ounce.
In Europe, the Stoxx 600
fell 1.9% and London’s FTSE 100
finished down 2%.
In Asia, Hong Kong’s Hang Seng Index
rose 0.1%, while the Shanghai Composite
fell 0.1% and Japan’s Nikkei 225