By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks turned lower on Tuesday as
disappointing earnings from Dow heavyweights outweighed news that
China's central bank injected liquidity into the financial
system.
The S&P 500(SPX) gave up earlier gains and fell 4.2 points,
or 0.2%, to 1,835.14, at its highs surpassing a recent record
close. The Dow Jones Industrial Average (DJI) dropped 126 points,
or 0.8% to 16,331.15, dragged down by losses in Verizon
Communication and Goldman Sachs. The Nasdaq Composite(RIXF) defied
the general trend and was up 4.3 points, or 0.1% at 4,201.83.
U.S. markets were closed on Monday in observance of Martin
Luther King Jr. Day.
Investors focused on earnings releases in a week light on
economic news ahead of the Federal Reserve meeting scheduled for
next week.
"Trading has been volatile on thin volumes, said Channing Smith,
managing director at Capital Advisors.
"In absence of economic data, focus is on earnings and they have
been mixed. Markets need a catalyst to break through the previous
highs, and earnings so far have not been as good as expected,"
Smith said.
"The longer the markets trade without breaking though the highs,
the higher the chances of a sell-off in the near future," he
added.
Dragging on the Dow, Verizon Communication Inc. (VZ) shares fell
3.1%. The firm said it swung to a profit amid a growth in
subscribers, particularly in its wireless and FiOS divisions.
However, investors were concerned with tougher competition.
Shares in Johnson & Johnson(JNJ) fell 1.9%, also hitting the
Dow, after the company reported fourth-quarter results. While the
quarterly earnings per share were above analyst expectations, the
full-year outlook disappointed investors.
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Delta Air Lines Inc. (DAL) shares climbed 2.2% on Tuesday after
the firm's fourth-quarter earnings beat Wall Street expectations
and Delta offered an upbeat outlook for the current quarter.
Forest Laboratories Inc. (FRX) gave up earlier gains and is
mostly unchanged after the pharmaceuticals firm reported that it
swung to a profit in the third-quarter and upgraded its outlook for
the current quarter.
A Bank of America Merrill Lynch survey of global fund managers
found that more investors think that U.S. stocks are overvalued.
The percentage of investors who think U.S. equities are too
expensive is at the highest level since 2000. While a Bloomberg
poll released on Tuesday found that investors are the most bullish
about the global economy in five years, highlighting the
brightening outlook for the recovery.
The S&P 500's cyclical sectors -- energy and natural
resources -- were among the biggest gainers after the People's Bank
of China said it provided emergency funding support for commercial
banks as they gear up to meet demands for cash ahead of the Lunar
New Year. The news lifted Hong Kong stocks as well as European
stocks.
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