By Corrie Driebusch
U.S. stocks crept lower Tuesday, as investors paused ahead of
first-quarter corporate earnings.
The Dow Jones Industrial Average slipped 5.43 points, or 0.03%,
to 17875.42. The S&P 500 shed 4.29 points, or 0.2%, to 2076.33
and the Nasdaq Composite declined 7.08 points, or 0.1%, to
4910.23.
The Dow industrials index had been up by as much as 102 points
earlier in the day, but lost its gains in late-afternoon
trading.
Traders said the market is in a holding pattern ahead of
quarterly results, and that U.S. stocks are unlikely to make any
dramatic moves until investors have a better sense of how companies
performed in the first three months of the year. First-quarter
earnings are widely expected to decline due both to a stronger
dollar and its effect on profits at large multinational companies,
and weaker commodity prices and their impact on energy companies.
In all, analysts expect earnings at S&P 500 companies to fall
4.9% from a year earlier, according to FactSet.
"The next market catalyst is going to be how earnings do against
expectations," said Brad McMillan, chief investment officer for
Commonwealth Financial Network, which manages about $97
billion.
In the past, a big earnings revision downward, such as the one
the market has seen in recent months, has been a harbinger of a
recession, said Mr. McMillan. However, he added that he doesn't
believe that is the case this time, because the revision has been
based on the price of oil and the strength of the dollar rather
than on slowing domestic demand or economic weakness.
"Still, we have an enormous earnings headwind ahead of us, and
the market is wrestling with this," he said.
Earnings season unofficially begins this week, when Alcoa Inc.
reports results after the stock market closes Wednesday.
Ahead of this unofficial kickoff to first-quarter results,
stock-trading volumes have been muted, with fewer shares changing
hands than typical. Tuesday was no exception, with only 5.7 billion
shares traded, the fewest since Jan. 2.
"Everyone's a little confused, a little cautious," said Seth
Setrakian, co-head of global equities at First New York Securities.
"They'd rather miss the next leg up than be caught overexposed.
There's a lot of cash on the sidelines."
On Monday, U.S. stocks rose on lower-than-average trading
volumes as investors shrugged off the disappointing employment
report for March. Friday's weak employment report, which showed the
economy added 126,000 jobs last month, has heightened the emphasis
on other labor and wage data, said Quincy Krosby, market strategist
at Prudential Financial.
"There is a premium on data with regard to employment, wages,
and anything that suggests that Friday's number was an aberration,"
she said.
That includes Tuesday's job openings and labor turnover survey,
which is closely watched by the Federal Reserve. According to the
Labor Department survey, the number of job openings in the U.S.
climbed to the highest level in 14 years, surpassing five million
for the first time since January 2001. But the number of Americans
actually hired to fill jobs declined, as did the number of people
who voluntarily quit.
Action in the stock market has been choppy this year as
investors prepare for an eventual increase in interest rates.
Comments from Federal Reserve Chairwoman Janet Yellen have
underscored that even when the Fed begins to move on rates, it will
do so gradually. The expected slow pace of rate increases will make
stocks appear a more attractive investment than bonds for a while
longer, investors say. The Dow has added 0.3% this year and is up
10% over the last 12 months, through Monday's close.
On Tuesday, European stocks advanced in their first day of trade
after the Easter holiday weekend. France's CAC 40 gained 1.5% and
Germany's DAX rose 1.3%. Investors were cheered by upbeat data on
private-sector activity, which expanded at the fastest pace in 11
months, even after slight downward revisions to initial
estimates.
In commodity markets, crude-oil futures gained 3.5% to $53.98 a
barrel, its highest settlement value since Dec. 30. Gold futures
lost 0.7% to $1210.60 an ounce.
The yield on the 10-year Treasury note slipped to 1.893% from
1.913% on Monday. Yields rise as prices fall.
In corporate news, FedEx Corp. said it would buy Dutch
parcel-delivery firm TNT Express NV for about EUR4.4 billion ($4.8
billion) to expand in Europe. FedEx shares rose 2.7%.
Informatica Corp. agreed to be taken private by Permira Advisers
LLC and the Canada Pension Plan Investment Board in a deal valued
at $5.3 billion, the largest U.S. leveraged buyout so far this
year. Shares rose 4.3%.
Energy logistics company Tesoro Logistics LP, a master limited
partnership created by refinery operator Tesoro Corp., has agreed
to buy the remaining stake of QEP Midstream Partners LP in an
exchange of common units. Shares of QEP Midstream jumped 6.2%.
Saumya Vaishampayan contributed to this article.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
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