Stocks Slip As Earnings Season Ramps Up
By Will Horner
U.S. stocks slipped Tuesday, on track to extend their losses as
investors assess blue-chip companies' profits and sales
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
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
"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)
Copyright (c) 2021 Dow Jones & Company, Inc.