The Dow stumbled ahead of Tuesday’s US trading session, as investors shifted their focus to corporate earnings and shaky fundamentals – a pivot that could spell trouble for the Fed-inspired rally.
As of 8:43 am ET on Tuesday, Dow Jones Industrial Average futures had fallen by 61 points or 0.23 percent, implying a 73.02 point drop at the open. S&P 500 and Nasdaq futures also pointed to losses, dropping 0.22 percent and 0.26 percent, respectively.
On Monday, the Dow slid by 83.97 points or 0.32% to 26,341.02 after losing as much as 185 points earlier in the session.
Shares of Boeing Co (BA) plunged 4.5% after the company announced Friday it would temporarily cut production of its best-selling 737 MAX 8 jets. Bank of America Merrill Lynch immediately lowered its rating on the stock to neutral’ from ‘buy.’
The broad S&P 500 Index of large-cap stocks flipped higher in the final hour of trading, gaining 0.1% to 2,895.77. Consumer staples, energy and information technology companies each rose 0.4% on average.
The technology-focused Nasdaq Composite Index climbed 0.2% to settle at 7,953.88.
U.S. stocks just rounded out their best quarter since the financial crisis. Read more: S&P 500 Sees Best Start to a Year Since 1998.
The U.S. stock market faces a “moment of truth” as investors begin shifting their focus back to fundamentals and away from monetary policy, according to Morgan Stanley. In a research note published Monday, the bank’s chief U.S. equity strategist Michael Wilson said first-quarter earnings could be “gut check” time for Wall Street.
“The moment of truth may be arriving with first-quarter earnings results,’’ Wilson said, according to Bloomberg.
The outlook may be about to change as S&P 500 companies get ready to deliver their latest financial results. For the first time since 2016, corporate earnings are expected to decline year-over-year. According to FactSet, industries such as energy, materials and information technology are expected to be the hardest hit.
Reporting season picks up later this week with a pair of results from JPMorgan Chase & Co (JPM) and Wells Fargo & Co (WFC).
Last modified: October 6, 2020 7:28 PM