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Market Snapshot: Dow slides nearly 300 points as investors wade into earnings deluge

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U.S. stocks were on track for back-to-back losses on Tuesday, as concerns about rising coronavirus cases globally offset healthy U.S. corporate earnings reports for the first quarter.

What are major indexes doing?
  • The Dow Jones Industrial Average
    DJIA,
    -0.68%

    tumbled 288.82 points, or 0.9%, to 33,788.81.
  • The S&P 500
    SPX,
    -0.68%

    fell 36.60 points, or 0.9%, to 4,126.66.
  • The Nasdaq Composite
    COMP,
    -0.91%

    shed 180.82 points, or 1.3%, to trade at 13,733.95.
  • The small-cap Russell 2000
    RUT,
    -2.16%

    slid 2.5%.

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’s driving 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 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, will remain 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 market 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.

Read: Why it may still be early days for the stock-market reflation trade

“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.

Check out: Oil prices went negative a year ago: Here’s what traders have learned since

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.

See: Why the rise in COVID-19 cases is keeping Morgan Stanley bullish on risky assets

“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 are in focus?

See: Tobacco stocks get ashed after report that Biden administration could require nicotine cutbacks

What are other markets doing?
  • The yield on the 10-year Treasury note
    BX:TMUBMUSD10Y
    fell 3 basis points to 1.57%, 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
    DXY,
    +0.06%
    ,
    a measure of the currency against a basket of six major rivals, was up 0.1%.
  • Oil futures edged higher, with the U.S. benchmark
    CLM21,
    -1.59%

    up 1.6% at $62.39 a barrel.
  • Gold futures
    GC00,
    +0.49%

    erased early weakness to nudge higher, rising 0.5% to $1,780 an ounce.
  • In Europe, the Stoxx 600
    SXXP,
    -1.90%

    and London’s FTSE 100
    UKX,
    -2.00%

    both finishe down around 2%.
  • In Asia, Hong Kong’s Hang Seng Index
    HSI,
    +0.10%

    rose 0.1%, while the Shanghai Composite
    SHCOMP,
    -0.13%

    fell 0.1% and Japan’s Nikkei 225
    NIK,
    -1.97%

    dropped 2%.

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