Stocks were mixed on Tuesday as investors looked for updates on a stimulus package and digested the first batch of corporate earnings.
The Dow Jones Industrial Average dipped 120 points, or 0.4%. The S&P 500 slid 0.4%. The Nasdaq Composite rose 0.1%, bucking the broader market’s downward trend, as Facebook, Amazon, Netflix, Alphabet and Microsoft all rose.
House Speaker Nancy Pelosi, D-Calif., told fellow lawmakers in a letter that the White House proposal for new coronavirus aid has insufficient offers on health-care issues. Later on Tuesday, Pelosi said she had no intention in meeting Senate Republicans in the middle.
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, Senate Majority Leader Mitch McConnell, R-KY, said Tuesday it will be a package of “roughly” $500 billion that will go on the Senate floor next week.
Wall Street was coming off a strong session on Monday as investors rotated out of cyclicals and into technology names.
“This hardly seems about ‘stimulus’ anymore,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “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.”
Earnings season kicks off
JPMorgan Chase reported better-than-expected results for the third quarter. Citigroup, another major bank also posted better-than-expected results for the previous quarter.
Dow member Johnson & Johnson 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 4.7% 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.
Third-quarter results overall are expected to decline significantly; however, traders are hoping for surprise to the upside.
“This earnings season, corporate America will get closer to the return of earnings growth, which is likely in the first quarter of 2021,” said Ryan Detrick, chief market strategist at LPL Financial. “We probably will have another decline in profits for third quarter 2020, though potentially only about half as big as last quarter’s.”
Investors also awaited Apple’s latest iPhone launch, which was pushed to Tuesday due to Covid-19. 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.
Amazon‘s Prime Day also started 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.
Disney rallied more than 4% after announcing a major company reorganization with streaming at the forefront of its business. Disney said it is centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.
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