By Will Horner 

U.S. stocks slipped Tuesday, on track to extend their losses as investors assess blue-chip companies' profits and sales prospects.

The Dow Jones Industrial Average dropped 0.3%, while the S&P 500 fell 0.2% and the Nasdaq Composite lost roughly 0.1%. All three indexes declined Monday, breaking a recent winning streak.

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 records. 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."

After the opening bell, Kansas City Southern jumped 14% after Canadian National Railway said it plans to offer $30 billion for the railway operator, likely sparking a bidding war.

Abbott Laboratories fell 3.2% after saying it expected earnings for the year to be slightly below analysts' forecasts. United Airlines fell nearly 5% after reporting weaker-than-expected results for the first quarter.

Tobacco giant Altria Group fell nearly 6%, 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.

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 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 1.1%. The U.K.'s FTSE 100 retreated 1.2% as tobacco companies dropped.

In Asia, major stock indexes were mixed. Japan's Nikkei 225 fell 2%, while Hong Kong's Hang Seng ticked up 0.1%. The Shanghai Composite Index edged down 0.1%.

Julia Carpenter contributed to this article.

Write to Will Horner at William.Horner@wsj.com

 

(END) Dow Jones Newswires

April 20, 2021 10:15 ET (14:15 GMT)

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