NEW YORK: The benchmark S&P 500 and the Nasdaq edged lower on Tuesday as a mixed bag of earnings from industry bellwethers threatened to douse a recent rally, while the Dow dropped on the back of losses in 3M.
3M tumbled 12.4% after forecasting dour annual earnings, while Johnson & Johnson fell 1.6% even after reporting quarterly results a nudge above expectations.
D.R. Horton shed 9% as the homebuilder missed estimates for first-quarter profit.
Verizon Communications rose 5.6% after forecasting a strong annual profit and posting its highest quarterly subscriber additions in nearly two years, while Procter & Gamble 4.4% as it topped second-quarter profit expectations.
“Earnings for all equity classes peaked and will move lower as the economy weakens and revenue growth stalls,” Wells Fargo senior global market strategist Sameer Samana said in a note.
“In the near term, we expect pressure on earnings as well as prices with bouts of weakness and range trading.” Of the S&P 500 companies that have reported results thus far, 86.6% surpassed earnings expectations, compared with 93.1% over a week ago, LSEG data showed.
The benchmark S&P 500 touched a fresh intraday record peak and closed at an all-time high for a second session on Monday, extending a bull-market run, fueled by strength in megacap tech and chip stocks.
Results from the heavily weighted “Magnificent 7” group of megacap companies, along with other large tech-related companies, will be key in unlocking further gains in the S&P 500 and to assess if their rich valuations are justified.
Netflix will report earnings after market close, while Tesla is due on Wednesday.
The blue-chip Dow also surpassed the 38,000-point mark for the first time on Monday, gaining for the third trading day.
Further, the personal consumption expenditure (PCE) index - the Fed’s preferred inflation gauge, the S&P Global PMI readings and an advance fourth-quarter GDP print this week will be key in assessing the central bank’s next policy decision when it meets on Jan. 31.
Wall Street had lost steam at the start of 2024, struck by a mixed bag of inflation data and Federal Reserve policymakers clamping down on market speculation of interest-rate cuts arriving as early as March this year.
The Fed will wait until the second quarter before cutting rates, according to a Reuters poll, with June now seen more likely than May.
At 11:35 a.m. ET, the Dow Jones Industrial Average was down 191.96 points, or 0.51%, at 37,809.85, the S&P 500 was down 5.85 points, or 0.12%, at 4,844.58, and the Nasdaq Composite was down 22.65 points, or 0.15%, at 15,337.64.
Among others, General Electric lost 0.9% after the engine maker’s bleak quarterly profit forecast.
RTX jumped 6.2% on a 10% surge in fourth-quarter revenue, while United Airlines gained 8.3% following an upbeat full-year outlook.
Declining issues outnumbered advancers for a 1.41-to-1 ratio on the NYSE and a 1.33-to-1 ratio on the Nasdaq.