Stocks Close Little Changed Ahead of Big Tech Earnings
April 27 2021 - 4:34PM
Dow Jones News
By Joe Wallace and Michael Wursthorn
U.S. stocks hovered near record levels as investors sold shares
of technology and communications stocks and Treasury yields
climbed.
The S&P 500 bounced around the flatline most of the trading
session a day after setting its 24th closing record of the year. As
of 4 p.m. ET, it was down less than 0.1%. Tesla shares were among
the broad index's biggest decliners after the electric car maker's
latest quarterly report underwhelmed investors.
Shares of other big tech companies that are due to report
earnings, including Microsoft, Google parent Alphabet and Spotify
Technology, were mixed.
Tuesday's trading session is the latest in a volatile stretch
that has seen the broader stock market grind higher rather than
continue its rocket-like climb of last year. Better-than-expected
earnings across the board have helped the market hit a series of
records in recent sessions, but the benefits appear to be on the
margins as investors seem picky in which share prices they push
higher.
About 30% of the companies in the S&P 500 have reported
results so far, with nearly 88% topping analysts' expectations. But
just 58% of reporting companies have seen their stock prices rise
in the wake of disclosing quarterly results, according to FactSet.
Investors appear cautious, money managers said, pointing to risks
stemming from elevated valuations, the potential for a jump in
inflation and the raging epidemic in India.
"We've got a big week of tech earnings where valuations are
probably a bit more stretched than in other areas," said Stuart
Rumble, investment director at Fidelity International.
After hitting its first record in about two months Monday, the
Nasdaq Composite retreated 0.3%. The Dow Jones Industrial Average
also struggled to gain momentum, finishing the day flat as falling
shares of 3M weighed on the blue-chip index even after reporting
better-than-expected earnings.
At the same time, the yield on 10-year Treasury notes rose to
1.618%, from 1.568% Monday, pushing prices lower. Yields are on
course to advance for a third consecutive session.
The other thing on investors' minds was Federal Reserve Chairman
Jerome Powell's next press conference on Wednesday once the central
bank wraps up its latest policy meeting. Investors will be looking
for clues around whether the Fed's thinking on interest rates has
changed in light of recent economic data, some of which suggests
inflation is reappearing.
So far, the Fed has repeatedly signaled that it has no immediate
plans to tighten fiscal policy until the economy and the labor
market fully recovers from the Covid-19 pandemic.
In company news, shares of Tesla, which reported a record
profit, fell 4.3%. The electric car maker's stock has struggled
this year, rising just 0.2% since the end of December, amid a
series of challenges including an investigation into a crash of a
Model S sedan earlier this month in Texas. The stock remains up
more than 300% over the past 12 months.
General Electric slipped about 2.1% after the company's
jet-engine business and divestitures weighed on its quarterly
results. Profits shrank at Eli Lilly, pushing shares down 3%. And
3M shares fell 4.9% even after the manufacturer said sales grew
across all of its segments.
Delivery companies topped the S&P 500's best performers,
with United Parcel Service shares jumping 11% after the shipping
company topped forecasts for profit and revenue. FedEx, which
reported earnings last month, rose 4.8%
Other movers included Lyft, which said Monday it was selling its
self-driving division to a unit of Toyota Motor, sending the stock
down 0.5% after reversing an earlier gain.
Some investors say stocks face a bumpy ride in the coming
months, pointing to signs of excess in cryptocurrencies and other
corners of financial markets.
"It may make sense to take a couple of chips off the table,"
said Daniel Egger, chief investment officer at St. Gotthard Fund
Management. Surveys showing that individual investors are extremely
bullish suggest stocks are vulnerable to a pullback, according to
Mr. Egger.
In overseas markets, losses for financial-service, auto and
basic-resource stocks weighed on the Stoxx Europe 600, which ticked
down 0.1%.
Among individual European companies, shares of UBS Group fell
2%. The Swiss lender said it lost $774 million from the implosion
last month of Archegos Capital Management, a bigger hit than
analysts expected.
In Asian markets, Japan's Nikkei 225 ended the session down
0.5%, and China's Shanghai Composite Index closed up less than
0.1%.
Write to Joe Wallace at Joe.Wallace@wsj.com and Michael
Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
April 27, 2021 16:19 ET (20:19 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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