NEW YORK, RAW – The S&P and Nasdaq have slipped from record levels at the close as investors digested a batch of corporate earnings results, while an expected policy announcement from the Federal Reserve helped to limit moves.
3M Co climbed as one of the biggest boosts on the Dow after it benefited from lower costs and demand for disposable respirator masks, hand sanitisers and safety glasses amid a surge in coronavirus infections.
Johnson & Johnson also provided a strong lift as the drug maker said it expected to report eagerly awaited COVID-19 vaccine data early next week.
Of the 84 companies in the S&P 500 that posted earnings through Tuesday morning, 86.9 per cent have topped analyst expectations, according to Refinitiv data.
Still, some companies showed the toll the pandemic has had on their businesses. American Express Co fell and was the biggest drag on the Dow after it posted a 15 per cent drop in quarterly profit as pandemic-led lockdowns and business restrictions kept the credit card issuer’s members from travelling and dining out.
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Verizon lost ground after the company posted earnings that topped expectations but missed prepaid phone subscriber estimates.
“It is still somewhat the early days but we are getting into the heart of it here,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.
“Expectations are for a continuation of the massive positive surprises we saw last quarter. The risk is that if the expectations are already there and there are disappointments, you get stocks like you see in American Express today getting slammed.”
Unofficially, the Dow Jones Industrial Average fell 12.24 points, or 0.04 per cent, to 30,947.76, the S&P 500 lost 4.6 points, or 0.12 per cent, to 3,850.76 and the Nasdaq Composite dropped 5.54 points, or 0.04 per cent, to 13,630.45.
Tech heavyweights Microsoft Corp and Advanced Micro Devices Inc were modestly higher before their earnings report after markets close.
Few, if any, changes are expected in the US Federal Reserve’s policy statement at the end of a two-day meeting on Wednesday, with Fed chair Jerome Powell likely to address inflation in his post-meeting news conference.
With the S&P 500 trading at more than 22 times 12-month forward earnings, concerns about stock bubbles on Wall Street are sparking fears of a pullback. Investors are keeping an eye out for forecasts from corporate America to justify the higher valuations.
Progress in stimulus talks is in focus, with US Senate Majority Leader Chuck Schumer saying Democrats will move forward on President Joe Biden’s coronavirus relief plan without Republican support if necessary.
Video game retailer GameStop Corp climbed after surging 144 per cent on Monday, as individual investors again piled into a number of niche stocks, prompting short sellers to scramble to cover losing bets.
General Electric Co jumped after the industrial conglomerate offered an upbeat outlook for its business this year and reported a surge in quarterly free cash flow.