The S&P 500 fell to start August, as investors navigated a raft of corporate earnings reports and assessed a fresh batch of economic data.
The broad-based index lost 0.27% to finish at 4,576.73, while the Nasdaq Composite dropped 0.43% to end at 14,283.91. The Dow Jones Industrial Average added 71.15 points, or 0.2%, to settle at 35,630.68. Earlier in the session, the Dow touched its highest level since February 2022.
Pharmaceutical giant Merck pulled back 1.3% even after reporting a smaller-than-expected loss and revenue that exceeded expectations, thanks to strong Keytruda sales. Caterpillar posted strong results, boosting shares 8.9%.
Pfizer fell 1.2% after posting mixed results due to plummeting Covid product sales, while Uber slid about 5.7% on mixed earnings. Elsewhere, JetBlue tumbled 8.3% after slashing guidance due to slowing domestic travel.
Tim Lesko, Managing Director at Mariner Wealth Advisors, attributed much of Tuesday’s moves to overbought conditions, given the market’s year-to-date strength and solid quarterly earnings season so far.
“We’ve had a market that’s been so strong for so many days that you get these strings of record highs on indices — basically, what feels like a relief rally that economic doom is not upon us,” he said. “Any pullback I would at this point see as a somewhat overbought market, because earnings season has largely been strong.”
This week marks the busiest stretch of second-quarter results with more than 160 S&P 500 constituents slated to report. More than half of the companies in the broad market index have already reported, with 82% topping earnings expectations, according to FactSet. This has fueled some hopes that the economy will be able to avoid a recession as inflation shows signs of cooling.
Despite the performance so far, analysts are bracing for a 7.1% earnings decline from a year ago, according to FactSet, and a third consecutive quarter of falling profits.
Wall Street also assessed a fresh batch of critical economic indicators offering more insight into the state of the economy. That included job openings data that came in slightly below expectations and manufacturing data that showed a continued contraction.
Souce Courtesy: CNBC