By Corrie Driebusch And Saumya Vaishampayan
U.S. stocks declined Tuesday after a mixed bag of earnings
reports.
The Dow Jones Industrial Average fell 72 points, or 0.4%, to
17963 and the S&P 500 index slipped 1.3 points, or 0.1%, to
2099. The Nasdaq Composite added 22 points, or 0.5%, to 5017.
Investors continue to focus on earnings, particularly on
guidance for the rest of the year. However, there appeared to be
little portfolio adjustment on Tuesday, with stock-trading volumes
remaining below normal, traders said. Some money managers said
while they are concerned about corporate earnings for the year,
they still view U.S. equities as the best place to invest.
"We still have some concerns, especially on revenue growth and
earnings growth, but in this low-rate environment there's really
not an alternative to stocks," said Jerry Braakman, chief
investment officer of Santa Ana, Calif.-based First American Trust,
which manages roughly $1.1 billion.
This week earnings are at the forefront for investors, as it is
one of the busiest weeks for companies reporting first-quarter
results.
On Tuesday, United Technologies Corp. said its sales fell about
1% in the first quarter because of the strengthening dollar and a
decline in its Sikorsky aircraft segment. Earnings beat Wall Street
expectations, though revenue fell short. Shares rose 0.6%.
DuPont Co. said the strengthening U.S. dollar will hurt its
earnings for the year more than it estimated in January, though it
still expects earnings to come in at the low end of its guidance of
$4 to $4.20 a share as it intensifies cost cuts. The company
reported sales declines across all of its segments. Shares declined
2.9%, making it one of the worst performers in the Dow.
International Business Machines Corp. on Monday reported a 12%
decrease in revenue, hurt by the stronger U.S. dollar and weakness
in its hardware business. Shares slipped 1%.
On Monday, U.S. stocks snapped two straight sessions of
declines. The Dow rose 1.2% to 18034.93 and the S&P added 0.9%
to 2100.40. The Nasdaq Composite gained 1.3% to 4994.60.
Including results from 77 companies, first-quarter earnings for
S&P 500 companies are on track to fall 4.2% from a year ago,
according to FactSet. Analysts had slashed earnings estimates
leading up to the reporting season, citing concerns about the
strong dollar's drag on earnings at multinational companies and the
hit to energy earnings from low oil prices. About 79% of the
S&P 500 companies that have reported so far have beat those
lowered earnings estimates.
"We don't anticipate any big surprises out of earnings," said
Janet Engels, director of the portfolio advisory group at RBC
Wealth Management.
"We do expect earnings will beat the current expectations, but
that's been the history," she said. "I'm not sure that it is in the
very near term enough to drive the market wildly higher," she
added.
This week is considered one of the busiest in the earnings
season.
"As we get through this week we will have a better sense of
where we are in terms of beating or missing expectations, and what
guidance will be like," said Brett Mock, managing director at
brokerage JonesTrading Institutional Services LLC.
He added that before having a better consensus view on how
earnings season is progressing, investors seem to be holding their
current stock positions.
In Europe, France's CAC 40 added 0.1% and Germany's DAX gained
0.4%. Continued concerns about a Greek debt default pushed Greek
yields to fresh multiyear highs and weighed on Greek stocks. Bond
yields rise as prices fall.
The euro rose to $1.0763 from $1.0739 on Monday.
In other corporate news, shares of Mylan NV surged 9.9% after
rival Teva Pharmaceutical Industries Ltd. proposed to acquire the
company for about $40 billion in cash and stock, a tie-up that
would create the world's biggest generic drug company by sales.
In commodity markets, gold futures rose 0.6% to $1201.10 an
ounce. Crude-oil futures slipped 0.8% to $57.39 a barrel.
Treasury prices fell, pushing the 10-year yield up to 1.899%
from 1.897% on Monday.
Write to Corrie Driebusch at corrie.driebusch@wsj.com and Saumya
Vaishampayan at saumya.vaishampayan@wsj.com
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