Stocks Edge Lower as Earnings Season Marches On
August 04 2020 - 10:37AM
Dow Jones News
By Caitlin Ostroff
U.S. stock slipped Tuesday as investors awaited a flurry of
earnings for companies and signs of progress in Washington around
an aid package to support an economy roiled by a pandemic.
The Dow Jones Industrial Average slipped 0.1%. The S&P 500
fell 0.05%. The technology-heavy Nasdaq Composite rose slightly to
0.08%.
Markets are monitoring negotiations among Democratic leaders and
White House officials on a new coronavirus aid package. The two
sides remain at odds over whether to cut a $600-a-week federal
jobless supplement or provide aid to financially strapped states
and localities.
"The market's assumption is that the U.S. economy is not yet
ready to stand on its own two feet. It appears that there is
agreement that more needs to be done, it's just about the shape of
that package," said Hugh Gimber, strategist at J.P. Morgan Asset
Management.
Investors, who worried that an uptick of coronavirus infections
last month would slow economic recovery, have been closely watching
a recent decline in new cases.
"One day's data doesn't mean anything, but I'm looking at
whether that's the beginning of a trend," said Fahad Kamal, chief
market strategist at Société Générale's private banking and wealth
management division Kleinwort Hambros.
More than three-quarters of S&P 500 companies have reported
earnings, with the majority beating analyst expectations, according
to UBS. This has led estimates for the third quarter to rise by
2.5% since the end of June.
Robust earnings from tech companies have lifted U.S. stock
markets higher in recent weeks, with the Nasdaq Composite climbing
to a fresh record Monday.
Bond markets have remained cautious though, with bond yields
ticking lower even as stocks have climbed, Mr. Kamal said. The
yield on the 10-year Treasury declined to 0.526% from 0.562%
Monday.
"There's more truth in the bond market, and if you look at the
yields they're still at record lows. There's still a very palpable
sense of fear among investors that there could be tail risks that
materialize," he said.
Shares in Take-Two Interactive Software Inc., the company behind
Grand Theft Auto and other gaming franchises, rose 3.5% after it
raised financial projections for the year on higher demand for
videogames during the pandemic. Shares in game maker Activision
Blizzard rose 0.2%. Shares in Emerson Electric rose 0.5% after the
conglomerate raised its full-year expectations following global
economic reopenings.
Shares in spirits maker Diageo, which owns Johnnie Walker
whiskey and Smirnoff vodka among other brands, fell 5% after it
reported that operating profit fell as the coronavirus pandemic
drove down sales in the second half of the year. North American
sales were strong as consumers shifted alcohol buying from bars to
grocery stores, but the growth didn't make up for shortfalls in
other markets.
In Europe, shares in BP climbed 6% after the British oil-and-gas
producer slashed its quarterly dividend for the first time in a
decade and launched a new strategy to pivot away from oil and gas.
Discount airline easyJet rose more than 8% on a
better-than-expected outlook.
In the Asia-Pacific region, Hong Kong's Hang Seng climbed 2%,
leading gains in the region. Japan's Nikkei 225 gained 1.7%.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
August 04, 2020 10:22 ET (14:22 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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