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S&P 500, Nasdaq miss out on records after big day for corporate earnings

MarketWatch logo MarketWatch 1/26/2021 William Watts
a close up of a busy city street © Spencer Platt/Getty Images
MARKET SNAPSHOT

Stocks finished slightly lower Tuesday as investors dug through a slew of high-profile corporate earnings reports a day after the S&P 500 and Nasdaq Composite scored another round of all-time highs.

The Dow fell 0.1% Monday for its third straight daily decline, while the S&P 500, up 0.4%, and the Nasdaq Composite, up 0.7%, ended at records.

Investors are wading through the busiest week of earnings reporting season, with Tuesday bringing a number of results from corporate heavyweights, including Dow components 3M Co. Johnson & Johnson Verizon Communications Inc. and American Express Co.

“The earnings are largely baked in. But what is going to be more important going forward is the outlook companies give,” said Kristina Hooper, chief global market strategist at Invesco. in an interview.

She added U.S. corporations may not offer much insight into the future, however, due to the uncertainties around the COVID-19 pandemic and the timetable for widespread distribution of vaccines.

Investors also eyed signs of potential market froth. Shares of videogame-retailer GameStop Corp. rose again, on track to add to a 600% gain so far this month which is attributed to a short squeeze amplified by a surge in options activity by individual investors.

See: As day traders make wild options bets in the stock market, some fear history is repeating itself


Video: S&P, Nasdaq close at record highs on optimism about Biden stimulus plan (Reuters)

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Investors continue to track negotiations around President Joe Biden’s push for $1.9 trillion in additional COVID-19 aid spending, which faces tough talks in a narrowly divided Senate as an impeachment trial for former President Donald Trump looms.

Senate majority leader Chuck Schumer told Democratic lawmakers they could be voting on a multi-year budget blueprint next week, the first step towards passing a new fiscal relief bill without Republican support.

Biden also said the U.S. could soon be vaccinating 1.5 million people a day, on average.

Moderna Inc. on Tuesday said it was on track to deliver 100 million doses of its COVID-19 vaccine to the U.S. government by the end of March and to deliver 200 million doses by the end of June. Shares of Moderna rose 3.3%.

The Cambridge, Mass.-based biotech said it has already delivered more than 30 million doses of the vaccine to the U.S. government. About 10.1 million doses of the vaccine have by now been administered in the U.S., the company said, citing Centers for Disease Control and Prevention data.

Meanwhile, the Federal Reserve on Tuesday kicked off a two-day policy meeting, its first of 2021. Policy makers are not expected to make any changes to policy, but are seen as likely to push back against ideas the central bank would be quick to begin easing up on asset purchases.

Investors will also eye how the Fed communicates over the recent worries around inflationary pressures building up this year. “The expectation from the Fed is they will reassure that it remains committed to its average inflation target, which means tolerating an overshooting of inflation,” said Hooper.

See: Think higher inflation is coming? The Fed will believe it when it sees it

The International Monetary Fund on Tuesday raised its forecast for global economic growth in 2021 but warned that there was still “extraordinary uncertainty” about the outlook.

The S&P CoreLogic Case-Shiller 20-city price index posted a 9.1% year-over-year gain in November, up from 8% the previous month. On a monthly basis, the index increased 1.5% between October and November.

The Conference Board said its index of consumer confidence rose to 89.3 this month from a revised 87.1 in December. Last month’s reading was the lowest in five months. Economists polled by Dow Jones and The Wall Street Journal had forecast a small decline to 88.

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