U.S. Stocks Drop as Earnings Season Begins
October 13 2020 - 3:10PM
Dow Jones News
By Anna Hirtenstein and Akane Otani
U.S. stocks wobbled Tuesday, pressured by a string of mixed
earnings reports from companies ranging from airlines to banks.
The Dow Jones Industrial Average fell 115 points, or 0.4%, to
28723. The S&P 500 lost 0.6% and Nasdaq Composite edged down
0.2%.
Uncertainty about a second wave of coronavirus infections and
the extent to which governments may have to renew restrictions to
control the spread is weighing on investors' minds as the
third-quarter earnings season kicks off.
Investors say that while support from the Federal Reserve helped
the market climb out of the lows it hit in the year, the economy's
recovery will likely be uneven and prolonged.
"Getting back to growth levels that we're used to historically
is going to take some time," said Zach Abraham, chief investment
officer of Bulwark Capital Management. He added that the tumult of
the past few months has created some potential buying opportunities
for the firm within beaten-down sectors like retail.
Earnings drove swings within the industrial sector Tuesday, with
Delta Air Lines shares falling 2.1% after it posted a steep drop in
sales for the most recent quarter and warned that the coronavirus
would likely cut into demand for travel for years.
Other airline stocks fell in tandem, with American Airlines
dropping 3.9% and United Airlines Holdings slipping 2.2%.
Financial stocks also came under pressure following a string of
quarterly reports.
JPMorgan Chase shares fell 1.4% after it posted earnings above
expectations, but also said it would extend the suspension on stock
repurchases at least through the end of the fourth quarter. Shares
of Citigroup lost 4.2% after the bank reported profit declined 34%
from the same period last year.
BlackRock bucked the trend, though, adding 4.5% after it
reported a third-quarter profit that was above expectations and
revenue that rose above forecasts.
News about potential vaccines for the coronavirus also moved
markets Tuesday.
Johnson & Johnson shares slid 2.5% after it halted its
coronavirus vaccine trials due to a participant becoming
unexpectedly sick, prompting fresh speculation about when
immunization shots may become widely available. The company also
raised its full-year expectations for adjusted operational sales in
its earnings report.
J&J's vaccine is one of the most advanced Covid-19 shots in
development and is among just a handful that had entered the last
stage of testing in the U.S. This is the second time such a trial
has been put on hold over a safety concern: AstraZeneca has since
resumed its testing efforts in the U.K., but its clinical trials in
the U.S. remain suspended.
"It's a reminder that while we have this race to get a vaccine,
it could actually take longer," said Paul Jackson, global head of
asset-allocation research at Invesco. People are also being too
optimistic over how quickly a vaccine can halt the pandemic, he
cautioned. "If we get one through the trials and authorized, that
would be a great step, but then it will still take quite some time
to get it widely distributed."
Overseas, the pan-continental Stoxx Europe 600 fell 0.6%.
In Asia, most major benchmarks were mixed. The Shanghai
Composite Index was flat after trade data showed that Chinese
exports rose nearly 10% in September, reflecting a continuing
recovery. Markets in Hong Kong were closed due to Tropical Storm
Nangka being slated to hit the city.
The International Monetary Fund also released an updated outlook
for global economic growth, as finance ministers and central
bankers gather virtually for the IMF and World Bank's annual
meetings. It raised its forecasts for 2020, saying that it now
expects the downturn to be less severe than it thought in June.
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Akane
Otani at akane.otani@wsj.com
(END) Dow Jones Newswires
October 13, 2020 14:55 ET (18:55 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.