U.S. stocks ended lower Tuesday, a day after the S&P 500 index scored a record close, as investors kept their attention on a stream of corporate earnings and awaited the outcome of a Federal Reserve meeting that’s expected to deliver another interest rate cut on Wednesday.
What did the major benchmarks do?
The Dow Jones Industrial Average
fell 19.3 points, or 0.1%, at 27,071.42, while the S&P 500 index
fell 2.53 points, or 0.1%, to 3,036.89, after it notched an all-time intraday high just shy of 3,047.73. The Nasdaq Composite Index
retreated 49.13 points, or 0.6%, at 8,276.85.
The S&P 500 ended in record territory for the first time in three months on Monday, with the large-cap index rising 16.87 points, or 0.6%, to close at a record 3,039.42, taking out the previous all-time closing high of 3,025.86 set on July 26. Other major indexes weren’t far behind, with the Dow ending just 1% from its record close set on July 15 and the Nasdaq Composite finishing just shy of its record close of 8,330.21 set on July 26.
What drove the market?
Investors parsed another round of corporate earnings reports Tuesday with the health sector and finance sector providing some support, but technology shares weighed on the indexes.
Dow components Merck & Co. Inc.
and Pfizer Inc.
closed 2.5% and 3.5% higher, respectively. Merck reported third-quarter profit and revenue that beat expectations and Pfizer said that third-quarter earnings rose more than expected, while upgrading guidance for the full-year 2019. The drug companies combined to give the Dow a 32-point boost in Tuesday trade.
Shares of Google parent Alphabet Inc.
fell 2.1% after the search giant reported a third-quarter earnings miss late Monday, helping weigh on technology shares and the broader S&P 500.
Corporations, however, largely continued a trend of reporting better-than-feared third quarter results, though expectations were lowered significantly heading into earnings season. Data from FactSet shows 78% of the S&P 500 index companies that have reported for the quarter so far have beaten analyst expectations, above the five-year average of 72%.
U.S.-China trade was also on the radar, with equities getting a lift Monday from positive noises out of Beijing and Washington late last week and over the weekend on prospects for concluding a deal. Stocks pulled back Tuesday afternoon, however, after a Reuters report that a “phase one” trade deal may not be ready for signing by the time President Trump and President Xi Jinping meet next month in Chile.
“On one side, there appears to be further progress on the first phase of a trade deal with China as both sides are on track to sign an agreement at an upcoming meeting in Chile next month,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said. “On another, we have a supportive Fed who is widely expected to provide additional stimulus to the economy in the form of another insurance rate cut this Wednesday.”
“Lastly, the bar was set very low going into the third quarter earnings season and with the companies that have reported thus far, optimism looks to be feeding off of better-than-expected results,” he wrote. “Against this backdrop, we would expect market optimism to continue to improve which is particularly important as we head into the holiday spending season.”
The focus was also turning to the Fed, with investors pondering whether the central bank will move to dampen expectations for further monetary easing beyond Wednesday’s expected interest rate cut.
The central bank’s rate decision will after the publication early Wednesday of U.S. GDP data which is expected to show a further slowdown in the third quarter. Economists surveyed by MarketWatch estimat gross domestic product increased at a 1.6% annualized pace in the July to September period, down from a 2% expansion in the second quarter.
But the highlight of this week’s economic calendar comes Friday with the October U.S. employment numbers. On Tuesday, investors were watching the Case-Shiller home-price index, which fell 0.2% in August while rising 2% year-over-year.
U.S. consumer confidence edged lower in October, with the Conference Board’s consumer confidence index printing at 125.9, from 126.3 in the prior month. Economists polled by MarketWatch had forecast a reading of 128.0.
Pending home sales rose for the second month in September, with the National Association of Realtors reporting they climbed 1.5%.
What companies were in focus?
shares were on investors radar as chief executive officer Dennis Muilenburg appeared before the U.S. Senate Commerce Committee as part of its investigation into the company’s 737 Max which were involved in 2 deadly crashes in the last year. Boeing’s stock rose 2.4%.
General Motors Co.
reported third-quarter profits that were well above expectations, despite a month long strike, and revenue that fell less than forecast, sending shares 4.3% higher.
Shares of Mastercard Inc.
fell 0.6% even after the payments company beat forecasts for profits and sales in the third quarter.
Shares of ConocoPhillips
fell 2.5% after the energy company beat estimates for earnings-per-share but did not report a revenue figure.
HCA Healthcare Inc.
shares rose 6.4% Tuesday after the hospital operator reported earnings that fell more than expected in the third quarter, but revenue that rose more than expected.
Xerox Holdings Corp.
shares gained 11.7% after the copier maker reported third-quarter profit and revenue that topped expectations and said it had decided not to sell its consumer financing business.
shares tumbled 43.3% after the online food delivery company reported disappointing sales figures and a downbeat outlook.
A first-time quarterly profit didn’t provide a lift for meat-substitute purveyor Beyond Meat Inc.
Shares lost 22.2% Tuesday after the company reported results after Monday’s closing bell.
How did other markets trade?
The yield on the 10-year U.S. Treasury note
fell about 1 basis point to 1.836%.
In commodities markets, the price of West Texas Intermediate crude oil for December delivery
fell 27 cents, or 0.5%, to settle at $55.54 a barrel on the New York Mercantile Exchange, and the price of an ounce of gold
fell $5.10, or 0.3%, to settle at $1,490.70 on Comex.
In Asia overnight, stocks traded mixed, the China CSI 300
falling 0.4%, Japan’s Nikkei 225
gaining 0.4% and Hong Kong’s Hang Seng Index
falling 0.4%. In Europe, stocks were mostly lower, as reflected by the Stoxx Europe 600
which closed 0.2% lower.