U.S. stocks were trading lower Tuesday afternoon as investors parsed earnings from some of the biggest financial institutions, to start the third-quarter reporting season.
Wall Street participants also were watching a number of corporate events, including the start of Amazon’s two-day Prime Day sales event and Apple’s rollout of its latest iPhone lineup.
How are stock benchmarks performing?
The Dow Jones Industrial Average DJIA fell 100 points, or 0.4%, to 28,737, while the S&P 500 SPX was down 14 points, or 0.4%, at 3,519. The Nasdaq Composite COMP edged 10 points higher, or 0.1%, to 11,887.
On Monday, the Dow rose 250.62 points, or 0.9%, to 28,837.52. The S&P 500 added 57.09 points, or 1.6%, to 3,534.22 while the Nasdaq Composite climbed 296.32 points, or 2.6%, to 11,876.26. It was the fourth straight day of gains for all three benchmark indexes.
What’s driving the market?
Investors were digesting a number of major corporate events on Tuesday, including earnings results from JPMorgan Chase JPM, which produced better-than-expected earnings but delivered slightly weaker-than-expected revenues.
The nation’s largest bank said Tuesday it had net income of $9.443 billion, or $2.92 a share in the third quarter, compared with $9.080 billion, or $2.68 a share, in the year-earlier period. However, revenue fell to $29.941 billion from $30.014 billion. The main reason for the surge in EPS was a fall in loan loss provisions which dropped by 90% to only $611 million.
“I look at the [fall in loan loss reverses] as a positive, but markets are suggesting a more different view,” said Kent Engelke, chief economic strategist at Capitol Securities, in an interview.
Setting aside less cash in case of future losses suggests bankers were predicting decreased turbulence and distress in the economy and businesses in the coming months, added Engelke.
Citigroup Inc. C also reported third-quarter profit and revenue that topped expectations, helped by strength in its institutional clients business and stabilizing credit costs. BlackRock Inc. BLK said that its quarterly profit rose by 22% as investors flocked to its suite of investment funds amid a volatile period, but a mostly dramatic rise, in equity markets.
Pharmaceutical giant Johnson & Johnson JNJ announced a pause of all of its COVID-19 vaccine trials, highlighting the challenges of producing a cure for the virus that has infected more than 37 million people globally so far, according to data aggregated by Johns Hopkins University.
Beyond earnings, the kick off of Amazon.com‘s AMZN two-day sales event and the presumed launch of Apple Inc.’s AAPL new iPhone roster of 5G compatible phones are expected to draw attention, as investors assess how consumers respond in the era of a pandemic that has weakened the economy.
Stalled talks in Congress around another package of coronavirus financial assistance also were on the minds of market participants and come against the backdrop of reports of the smallest increase in new coronavirus infections in a week in the U.S.
“On the political front, not much is changing as [Democratic challenger Joe] Biden continues to hold a considerable lead [over President Donald Trump] nationally as well as in key swing states like Pennsylvania, Michigan, and Wisconsin,” said Yousef Abbasi, global market strategist at StoneX, in a note.
Investors have become comfortable with the potential for a Democratic party sweep of both the White House and Congress on expectations that such an outcome would lead to a larger, near-term fiscal stimulus package early next year, analysts said.
“The latest stimulus narrative suggests nothing in the near-term but the prospects of the ‘Blue Wave’ certainly paves the way for larger, future stimulus. In the meantime, the markets appear to be balancing COVID concerns with the political outlook and the prospects of stimulus,” Abbasi said.
Meanwhile, hospitals in some parts of the country are seeing a rise in the number of coronavirus patients ahead of the winter flu season. U.S. hospitalizations are at the highest level since Sept. 2, according to data from the COVID Tracking Project, The Wall Street Journal reported.
In economic data, the September consumer-price index rose 0.2%, in line with forecasts.
Which stocks are in focus?
- Shares of JPMorgan Chase fell 1.5% after it announced third-quarter results.
- Walt Disney Co. shares DIS jumped 4.3% Tuesday after the entertainment giant late Monday announced a strategic reorganization of its media and entertainment businesses to focus on streaming.
- Amazon.com shares were up 0.9% as the company is expected to generate some $10 billion in sales from its Prime Day sales event, experts say.
- Apple Inc. AAPL shares were down 1.4% before Tuesday’s event.
- Shares of J&J were down 2.1% after the company announced the pause of its COVID-19 trial.
- BlackRock‘s stock rose 4.8% after its results.
- Citigroup shares fell 4% after its earnings release.
What are other markets doing?
In global equities, the Shanghai Composite CN:SHCOMP rose marginally, while Japan’s Nikkei 225 Index JP:NIK gained 0.4%. The pan-European Stoxx 600 Europe index XX:SXXP fell around 0.6% and London’s FTSE 100 stock index UK:UKX lost 0.5%.
Oil futures bounced, with the U.S. benchmark CRUDE OIL – ELECTRONIC up 2.6% to $40.44 a barrel after data showed a rise in Chinese crude imports. Gold futures GOLD were down 1.9% to $1,892.50 an ounce, on pace to snap a four-day win streak.
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.6%.