Stocks give up an early lead, end lower
Stocks capped a day of muted trading on Wall Street with slight losses Tuesday, giving back some of their modest gains from a day earlier.
The S&P 500 slipped 0.1% after spending much of the day drifting between small gains and losses. Declines in banks, industrial companies and elsewhere pulled the market lower. Gains in some Big Tech companies, including Amazon and Facebook, helped keep the losses in check.
Small-company stocks fell more than other areas of the market, while blue chip companies like Johnson & Johnson and General Electric climbed after reporting better-than-expected results. Treasury yields rose.
The market has been mostly making small moves since last week, keeping the stock indexes near their recent record highs, as investors weigh solid corporate earnings results against renewed worries that troubles with COVID-19 vaccine rollouts and the spread of new variants of coronavirus might delay a recovery from the pandemic.
“Most major indexes are hovering near all-time highs, so for the market to be taking a little breather is not too surprising, given the ascent we’ve seen recently,” said Angelo Kourkafas, investment strategist at Edward Jones.
The S&P 500 lost 5.74 points to 3,849.62. The benchmark index is within 0.2% of the record high it set Monday. The Dow Jones Industrial Average dropped 22.96 points, or 0.1%, to 30,937.04. The tech-heavy Nasdaq composite slid 9.93 points, or 0.1%, to 13,626.06. The Russell 2000 index of smaller companies gave up 13.42 points, or 0.6%, to 2,149.86.
Investors are in the midst of quarterly earnings reporting season for U.S. companies, and this is the busiest week so far. Dozens of large companies are reporting this week, from all parts of the economy, including American Express, J&J, Apple, GE and others.
More than 100 companies in the S&P 500 are scheduled to tell investors this week how they fared during the last three months of 2020. As a whole, analysts expect S&P 500 companies to say their fourth-quarter profit fell 5% from a year earlier. That’s a milder drop than the 9.4% they were forecasting earlier this month, according to FactSet.
“The major theme, not only today but this week, is earnings season,” Kourkafas said. “The early results are encouraging.”
General Electric climbed 2.7% after the industrial conglomerate reported a surge in cash flow. GE is attempting a turnaround after shedding unprofitable divisions and focusing more on big industrial products like jet engines and power equipment. Typically, when a company is in turnaround, investors care more about cash flow than quarterly profits because it shows the company is able to pay down debts.