Stocks Open Lower Ahead of Earnings Flurry
April 20 2021 - 10:01AM
Dow Jones News
By Will Horner
U.S. stocks fell in early trading, suggesting major indexes will
extend losses as investors assess blue-chip companies' profits and
sales prospects.
The S&P 500 and the Dow Jones Industrial Average retreated
0.2% and 0.3%, respectively, pointing to a second day of losses.
The technology-heavy Nasdaq Composite Index dropped less than 0.1%
.
Investors are looking to companies' first-quarter earnings and
their outlooks for the rest of the year to gauge whether valuations
on stocks are justified. Strong U.S. economic data has bolstered
expectations and fueled the recent rally that has left major
indexes hovering close to record highs. Rising Covid-19 infection
levels in some countries and signs that the vaccine rollout may be
faltering are now tempering that optimism.
"All these company share prices are near or close to record
highs and we are seeing a lot of people taking money off the
table," said Michael Hewson, chief market analyst at CMC Markets.
"There is a general lack of impetus."
Ahead of the opening bell, Kansas City Southern jumped 17% after
Canadian National Railway said it plans to offer $30 billion for
the railway operator, likely sparking a bidding war.
Abbott Laboratories fell 3% after saying it expected earnings
per share for the year to be slightly below analysts' forecasts.
United Airlines fell over 3% after reporting weaker than expected
results for the first quarter.
Tobacco giant Altria Group fell 2.4%, extending losses into a
second day, after The Wall Street Journal reported that the Biden
administration is considering a rule forcing tobacco companies to
reduce nicotine in cigarettes to levels at which they are no longer
addictive. In London, British American Tobacco and Imperial Brands
each fell roughly 6%.
Investors entered earnings season with high expectations,
particularly for economically sensitive stocks such as banks and
retail that stand to win the most from the economy reopening.
Netflix is expected to post its results after markets close
Tuesday.
"The only risk is that expectations across the board are so
high, they are going to be very difficult to meet," said Seema
Shah, chief strategist at Principal Global Investors. "We are
getting into territory -- both with earnings and economic data --
where it will be very difficult to have positive surprises."
In the bond market, the 10-year U.S. Treasury yield was largely
unchanged from 1.599% on Monday. Yields fall as prices rise.
Dogecoin, the cryptocurrency created as a joke, pared back gains
after climbing more than 8,000% this year. It fell almost 4% to 39
cents, according to CoinDesk. Some users of online forums have said
they plan to push the cryptocurrency to $1 by Tuesday, in what some
have called "Doge Day."
Overseas, the pan-continental Stoxx Europe 600 fell 1.2%. The
U.K.'s FTSE 100 retreated 1.2% as tobacco companies dropped.
In Asia, major stock indexes were mixed by the close of trading.
Japan's Nikkei 225 fell almost 2% while Hong Kong's Hang Seng
ticked up 0.1%. The Shanghai Composite Index edged down 0.1%.
Write to Will Horner at William.Horner@wsj.com
(END) Dow Jones Newswires
April 20, 2021 09:46 ET (13:46 GMT)
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