Stocks fell slightly on Tuesday as investors digested the first batch of corporate earnings and looked for updates on a stimulus package.
The Dow Jones Industrial Average dipped 61 points, or 0.2%. The S&P 500 slid 0.2%. The Nasdaq Composite pulled back by 0.1%.
JPMorgan Chase reported better-than-expected results for the third quarter. Johnson & Johnson, another Dow component, posted earnings that beat analyst expectations and raised its full-year profit guidance. However, J&J shares were down 2% after the company paused its coronavirus vaccine trial after an “adverse event” was reported.
Asset-management giant BlackRock saw its shares gain 2.8% after the company reported earnings that beat analyst expectations. BlackRock also said its assets under management grew to $7.81 trillion from $7.32 trillion in the previous quarter. Shares of Citigroup also rose after beating estimates for revenue and earnings.
Delta Air Lines, however, reported a wider-than-expected loss for the quarter and revenues down 75% compared with the same quarter last year. Shares fell 1.9%. Third-quarter results overall are expected to decline significantly; however, traders are hoping for surprise to the upside.
On Monday, investors rotated out of cyclicals and into technology names after little updates on a fiscal aid package were revealed. The Dow Jones Industrial Average climbed 250 points and the S&P 500 gained 1.64%, both helped by a 6.4% jump in Apple’s stock. With technology stocks leading the way, the Nasdaq Composite gained 2.56% on Monday, for its best day since September 9.
Apple’s long awaited iPhone launch, which was pushed to October due to Covid-19, occurs on Tuesday and the company is expected to launch its first ever 5G iPhone. It will be “the most significant iPhone event in years,” Morgan Stanley’s Katy Huberty told clients. The stock fell more than 1% on Tuesday.
Amazon‘s Prime Day starts on Tuesday and the two-day event could mark the biggest online shopping day of the year, according to NPD, with 57% of consumers planning to do some if not all of their holiday shopping this week. Amazon shares dipped 0.2% Tuesday following a 4.8% pop on Monday.
Disney rallied more than 3% after announcing a major company reorganization with streaming at the forefront of its business. Disney said it centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.
Investors also weighed the possibility of a second coronavirus relief package from Washington. Over the weekend, the Trump administration called on Congress to pass a smaller $1.8 billion coronavirus relief bill as negotiations on a bigger package continue to run into roadblocks. However, House Speaker Nancy Pelosi In a letter to colleagues, said the proposition has insufficient offers on healthcare issues.
“This hardly seems about ‘stimulus’ anymore,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. The S&P 500 index rallied back near all-time record highs today led by growth — the technology, communications, and consumer discretionary sectors.”
“Recently, the stock market has been rising whether news surrounding an additional stimulus package is good or bad, suggesting stocks are already responding to what will likely prove to be a wonderful quarterly earnings season,” Paulsen added.
The Labor Department also released its consumer price index for September. The measure met expectations with an increase of 0.2%, though prices for used cars rising sharply.
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