FINANCIAL MARKETS
NEW YORK—U.S. stocks fell Tuesday after weak first-quarter reports from Johnson & Johnson and Goldman Sachs frustrated investors who hope that company earnings are on the rise. Health care companies lost the most.
Wall Street has high hopes for company earnings this spring, and weak results from the world’s largest health care products company and one of the biggest financial firms had them concerned. Johnson & Johnson took its biggest one-day loss in a year. Investors also looked for safety after the British government called for a surprise early election next month. Bond prices and the pound rose and European stock indexes tumbled.
Kate Warne, an investment strategist for Edward Jones, said Goldman Sachs and Johnson & Johnson had a dramatic effect on stocks because investors expect a very strong round of company earnings reports this month. According to S&P Global Markets Intelligence, investors expect first-quarter earnings for S&P 500 companies to rise almost 10 percent compared to last year. That would be the biggest jump since 2014.
The Standard & Poor’s 500 index shed 6.82 points, or 0.3 percent, to 2,342.19. The Dow Jones industrial average lost 113.64 points, or 0.6 percent, to 20,523.28. Goldman Sachs was responsible for most of that loss.
The Nasdaq composite fell 7.32 points, or 0.1 percent, to 5,849.47. The Russell 2000 index of small-company stocks recovered from an early loss and rose 0.71 points, close to 0.1 percent, to 1,361.89.
On Monday stocks made their biggest gain in six weeks. But over the last few weeks they’ve mostly drifted lower while bond yields have fallen to fivemonth lows.
Johnson & Johnson stumbled after investors were disappointed with its sales. Revenue from its biggest-selling drug, the Crohn’s disease treatment Remicade, fell 6 percent. Meanwhile growth for many consumer health products slowed, and payers demanded bigger rebates on treatments for cardiovascular ailments, diabetes, and primary care products.
Goldman Sachs’ revenue fell short of investor projections in the first quarter as its highly-regarded trading desks didn’t perform as well as their competitors. The stock gave up $10.6, or 4.7 percent, to $215.59, its biggest loss since June. The stock reached all-time highs above $250 a share in March.
As investors snapped up government bonds, their prices jumped. The yield on the 10-year Treasury note fell to 2.18 percent, its lowest since Nov. 11. It finished at 2.25 percent Monday.
U.S. crude oil futures lost 24 cents to $52.41 a barrel in New York. Brent crude, used to price international oils, lost 47 cents to $54.89 per barrel in London.
Wholesale gasoline fell 1 cent to $1.71 a gallon and heating oil dipped 1 cent to $1.62 a gallon. Natural gas lost 2 cents to $3.15 per 1,000 cubic feet.
Gold rose $2.20 to $1,294.10 an ounce. Silver skidded 24 cents, or 1.3 percent, to $18.27 an ounce. Copper fell 7 cents, or 2.6 percent, to $2.53 a pound.