By Sue Chang and Ellie Ismailidou, MarketWatch
Dollar slumps against yen
U.S. stocks fell Tuesday as a sharp drop in McDonald's Corp.
weighed on sentiment and as the market braced for Apple Inc.
results due after the closing bell. Investors were also reluctant
to carve out big positions as the Federal Reserve kicked off its
two-day monetary policy meeting.
The large-cap S&P 500 index edged down 2 points to 2,166.
Materials were the best performers while telecom and utilities
stocks were the biggest losers.
The Nasdaq Composite Index bounced back to rise 9 points, or
0.2%, to 5,106.
The Dow Jones Industrial Average fell 50 points, or 0.3%, to
18,442, dragged down by McDonald's (MCD), which slumped 4.6%. The
world's largest fast-food restaurant chain reported
slower-than-expected same-store sales
(http://www.marketwatch.com/story/mcdonalds-same-store-sales-growth-falls-short-2016-07-26-94855930),
pressuring the blue chip index.
Apple(AAPL), another Dow component, is scheduled to release
fiscal third-quarter earnings with the tech giant widely expected
to post a drop in earnings per share from a year earlier as iPhone
sales continue to shrink. Apple shares are off 0.7% and down 8.2%
this year.
"Sentiment towards the stock in the investment community is as
negative as we can remember, at least in the post-iPod era,"
according to Bespoke Investment Group, which illustrated Apple
stock's decline over the past three years in this chart:
Investors were also reluctant to place any significant bets
ahead of the Federal Open Market Committee's interest-rate decision
on Wednesday, according to analysts. The central bank's meeting is
its first gathering since the U.K. voted to leave the European
Union on June 23.
"No one on the Street is looking for any movement by the Fed at
this meeting," Bob Pavlik, chief market strategist at Boston
Private Wealth LLC, said in emailed comments. "Any commentary
referencing an improved operating environment will lead more to
believe a September rate hike is looking more likely."
Read:What to expect in the Fed statement
(http://www.marketwatch.com/story/what-to-expect-in-the-fed-statement-next-week-2016-07-22)
Meanwhile, investors shrugged off positive news from the housing
market, where new home sales in June rose to a seven-year high
(http://www.marketwatch.com/story/new-home-sales-power-ahead-rising-to-7-year-high-592000-annual-pace-2016-07-26)while
the Case-Shiller home-price index also inched higher in May.
Instead, the market was bracing for a deluge of earnings.
"Right now everyone is--rightfully or wrongfully--focusing
completely on Fed policy and earnings," said Kent Engelke, chief
economic strategist at Capitol Securities Management.
Though the central bank is expected to hold interest-rates
steady, there are more risks to the downside stemming from the
content of its policy statement, according to Engelke.
"If the Fed comes out more hawkishly and earnings disappoint,
[the Dow] could plunge up to 1,000 points," Engelke said, adding
that there is a lot of "nervousness" which has sparked some
profit-taking.
Earnings:
Verizon Communications Inc. (VZ) fell 2% despite reporting
second-quarter earnings that beat forecasts
(http://www.marketwatch.com/story/verizon-q2-earnings-negatively-impacted-by-union-strike-but-above-expectations-2016-07-26).
The company also announced its $4.83 billion deal on Monday to buy
Yahoo Inc.'s (YHOO) assets for $4.83 billion in cash
(http://www.marketwatch.com/story/verizon-agrees-to-48-billion-deal-to-buy-yahoo-2016-07-24),
which is expected to close in the first quarter 2017.
DuPont(DD) gained 0.6% after the chemicals major reported
earnings ahead of forecasts.
Under Armour Inc.(UA) sank 5% after the sportswear company said
profit dropped in the second quarter
(http://www.marketwatch.com/story/under-armour-earnings-fall-but-meet-expecations-2016-07-26).
United Technologies Corp.(UTX) rose 2.6% after reporting
earnings and sales ahead of expectations and said its on track to
meet its growth targets for 2020
(http://www.marketwatch.com/story/united-tech-profit-and-sales-beat-lifts-low-end-of-full-year-outlook-2016-07-26).
(http://www.marketwatch.com/story/apple-earnings-another-iphone-decline-stronger-software-revenue-expected-2016-07-22)Shares
of Gilead Sciences Inc. (GILD) skidded 8.5% after the biotech firm
late Monday said revenue from its hepatitis C drugs fell
(http://www.marketwatch.com/story/gilead-shares-drop-as-drug-maker-cuts-product-sales-outlook-2016-07-25)
in the second quarter.
Read:Apple earnings: Another iPhone decline, stronger software
revenue expected
(http://www.marketwatch.com/story/apple-earnings-another-iphone-decline-stronger-software-revenue-expected-2016-07-22)
Economic news: The Markit PMI services index for July slowed to
50.9, a five-month low and down from 51.4 in June.
A measure of consumer confidence
(http://www.marketwatch.com/story/consumer-confidence-holds-steady-in-july-2016-07-26)
from the Conference Board held steady in July, suggesting Americans
are 'cautiously optimistic" that the U.S. economy will continue to
grow.
Other markets: The dollar fell against most other major
currencies and particularly took a dive against the yen
(http://www.marketwatch.com/story/yen-surges-against-dollar-other-rivals-as-japan-stimulus-plan-falls-short-2016-07-26)
ahead of the Bank of Japan meeting on Friday. Expectations that the
central bank will launch more aggressive monetary easing have
started to fade, sending the yen to its highest level against the
greenback since mid-July.
Oil prices continued to lose ground, while gold edged down to settle at $1,320.80 an ounce.
Asian stock markets mostly rose, although Japan closed lower
(http://www.marketwatch.com/story/nikkei-falls-after-disappointing-report-on-stimulus-plan-2016-07-25).
European markets
(http://www.marketwatch.com/story/european-stocks-slip-as-investors-weigh-corporate-updates-central-bank-moves-2016-07-26)
traded mixed.
--Sara Sjolin contributed to this article.
(END) Dow Jones Newswires
July 26, 2016 15:22 ET (19:22 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.