Stock Market

Dow falls 500 points as stock market fails to build on Monday bounce ahead of megacap tech earnings

U.S. stocks were trading sharply lower early afternoon Tuesday, failing to build on the previous session’s bounce, as investors sift through a raft of company results and await earnings reports due after the bell from tech giants including Microsoft Corp. and Google parent Alphabet Inc.

How are stock indexes performing?
  • The Dow Jones Industrial Average

    dropped almost 511 points, or 1.5%, to about 33, 539.

  • The S&P 500

    fell 74 points, or 1.7%, to about 4,222.

  • The Nasdaq Composite

    lost about 355 points, or 2.7%, to trade at 12,650.

Monday saw the biggest intraday reversal since February for the Dow, which rose 238 points, or 0.7%, erasing a loss of nearly 500 points. The S&P 500 rose 0.6%, and the Nasdaq Composite gained 1.3%.

Also read: U.S. stocks ended a Manic Monday in the green — but intraday bounces like this aren’t bullish

What’s driving markets?

Stocks were lower midday Tuesday, with all three major benchmarks down after Monday’s rally.

“Investors are not necessarily secure” in the strength of the market, with “fragility” on display since the beginning of the year, said Aoifinn Devitt, chief investment officer at Moneta, in a phone interview Tuesday. “There is this fear of slowing growth.” 

The CBOE Volatility Index

jumped more than 13% to more than 30 around midday Tuesday, according to FactSet data. That compares with a 200-day moving average of around 21.

Consumer discretionary, information technology

and communication services

were the hardest hit sectors of the S&P 500 in early afternoon trading Tuesday, according to FactSet data. Tech and communications services had posted the strongest performance for the S&P 500 in Monday’s stock market rally.

“Now we have this giveback today,” said Devitt. “Markets are trying to figure out a level.”

The S&P 500 is trading not far off its closing low this year of 4170.70 on March 8, according to Dow Jones Market Data.

U.S. stocks were falling as investors wade further into the busiest week of the U.S. company-earnings reporting season, digesting results from a number of corporate heavyweights released before the opening bell. They’re also looking ahead to results from megacap tech companies Microsoft Corp.

and Google parent Alphabet Inc.

“This week a lot of attention will be on the megacap earnings announcements. Netflix’s announcement proved to be a big speed bump that the market is still trying to get over and hopefully there will be some horsepower to help us over, created by announcements and forecasts of the remaining FAANG stocks this week,” said Brian Overby, senior options analyst at Ally Bank, in emailed comments.

Formerly high-flying Netflix

shares have dropped more than 40% since announcing last week that it had lost 200,000 subscribers in the first quarter.

While close to 80% of companies so far reporting earnings for the quarter have beaten profit expectations, including General Electric Co., United Parcel Service Inc. and Pepsico Inc., disappointing earnings forecasts, including those from JetBlue Airways Corp., are weighing on shares.

In U.S. economic data, orders at U.S. factories for durable goods rose 0.8% in March and business investment rebounded after the first decline in a year, signaling the economy is still growing at a steady pace. The rise in durable-goods orders matched the consensus expectation produced by a survey of economists by The Wall Street Journal.

 A survey of consumer confidence dipped in April to 107.3 from 107.6, but Americans signaled they are optimistic enough about the economy to keep buying big-ticket items such as news cars and appliances.

 The S&P CoreLogic Case-Shiller 20-city house price index posted a 20.2% year-over-year gain in February, up markedly from 18.9% the previous month, but U.S. new-home sales decreased 8.6% to an annual rate of 763,000 in March, the government said Tuesday. 

Which companies are in focus?
  • Twitter Inc.

    shares fell about 3.2% Tuesday to around $50 after its board agreed Monday to accept Tesla chief Elon Musk’s $54.20 a share bid for the social-media platform.

  • 3M Co.

    shares dropped 3.4% after the maker of post-it notes and industrial equipment posted better-than-expected first-quarter earnings.

  • Shares of PepsiCo Inc.

    rose 0.5% after delivering earnings and revenue that exceeded Wall Street forecasts.

  • United Parcel Service Inc.

    shares fell 3.2% after the package-delivery giant reported first-quarter profit and revenue that beat expectations.

  • General Electric Co.

    shares plunged 11.8% after the industrial conglomerate reported first-quarter adjusted profit and revenue that beat expectations, but missed on free cash flow and provided a somewhat downbeat outlook.

  • Shares of JetBlue Airways Corp.

    dropped 9.2% after the air carrier reported a narrower-than-expected loss and revenue that more than doubled to match forecasts, but said it planned to reduce capacity growth further to help restore operational reliability. United Airlines Holdings Inc.

    said Tuesday it is launching the biggest transatlantic expansion in its history with 30 new or resumed flights coming from mid-April through early June. United Airline shares fell 4.5%.

How are other assets are faring?
  • The yield on the 10-year Treasury note

    fell about 7 basis points to around 2.76%. Yields and debt prices move opposite each other.

  • The ICE U.S. Dollar Index
    a measure of the currency against a basket of six major rivals, rose 0.4%.

  • Bitcoin

    fell 3.3% to trade around $38,825.

  • Oil futures climbed, with the U.S. benchmark

    up 3.1% to trade around $101.55 a barrel.

  • Gold futures

    rose 0.3% to trade at $1,902.40 an ounce.

  • In European equities, the Stoxx Europe 600

    closed 0.9% lower, while London’s FTSE 100

    gained 0.1%.

  • In Asia, the Shanghai Composite

    fell 1.4%, while the Hang Seng Index

    rose 0.3% in Hong Kong and Japan’s Nikkei 225

    gained 0.4%.

—Steve Goldstein contributed to this report.

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