Stocks Close Lower As Nasdaq Drops 0.9%
By Will Horner and Julia Carpenter
U.S. stocks slipped Tuesday, extending their losses as investors
assess blue-chip companies' profits and sales prospects.
The Dow Jones Industrial Average dropped 0.8%, or 257 points,
while the S&P 500 fell 0.7% and the Nasdaq Composite lost 0.9%.
All three indexes declined Monday, breaking a recent winning
Investors are looking to companies' first-quarter results 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.
"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."
Rising Covid-19 infection levels in some countries and signs
that the vaccine rollout may be faltering are now tempering that
Investors entered earnings season with high expectations,
particularly for economically sensitive stocks such as banks and
retailers 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."
Airline stocks were among Tuesday's losers. United Airlines fell
9.5% after reporting weaker-than-expected results for the first
quarter. Other airlines followed, with American Airlines and Delta
Air Lines dropping 5.2% and 4%, respectively. Alaska Air Group fell
"Air travel is really a story of two segments," said Ed Keon,
chief investment strategist at QMA. "Leisure travel is back, but
business travel is still way down. To really get back to
profitability, they need the business traveler to come back, and
that is still happening very slowly."
Shares of manufacturing and tech companies, however, may benefit
in the coming months, Mr. Keon said, as the global shortage of
computer chips, lumber and other supplies continues.
"These may not last forever, but at least for the moment there
are spot shortages both of goods and ways of getting those goods to
customers," he said. "That is likely to continue to put some upward
pressure on some of those products and services."
Kansas City Southern shares jumped 16% after Canadian National
Railway said it plans to offer $30 billion for the railway
operator, likely sparking a bidding war. These gains put the
company on pace for its largest percent increase since March 24,
2020, when it rose 22%.
"When we see recovery in a lot of the manufacturing sector, for
example, or in the energy sector, or even in the minings and
commodities sector, a lot of that is predicated on anticipation of
a more normalized economic environment that will look more like
2019 than 2020," said George Maris, co-head of equities, Americas,
at Janus Henderson.
In the bond market, the 10-year U.S. Treasury yield edged down
to 1.562% 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. By Tuesday, it fell to
35 cents, according to CoinDesk, but some users of online forums
have said they plan to push the cryptocurrency to $1 to recognize
what some have called "Doge Day."
Overseas, the pan-continental Stoxx Europe 600 fell 1.9%. The
U.K.'s FTSE 100 retreated 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%.
Write to Will Horner at William.Horner@wsj.com and Julia
Carpenter at Julia.Carpenter@wsj.com
(END) Dow Jones Newswires
April 20, 2021 16:17 ET (20:17 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.