US stocks are falling lower as investors enter earnings streams

What drives the market?

Analysts say earnings reports, which got off to a strong start for the quarter, will be scrutinized as investors estimate the strength of the economic recovery from the COVID-19 pandemic. Guidance of companies regarding the outlook for the coming year can be even more important in determining the market direction.

“Business outlook may indicate whether the rally could continue from last year’s low,” Charalambos Pissouros, senior market analyst at JFD Group, said in a note.

Read: Why it may be too early for stock market reflation trading

“As most major central banks suggest that inflation spikes this year are likely to turn out to be temporary, and as we remain committed to keeping their monetary policies extra lenient, we believe that even if earnings disappoint somewhat, there will be a good opportunity for stocks to recover and continue the trend north, ”he said.

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A resurgence in new COVID-19 cases, even as the introduction of the vaccine continues, has been seen as a damper on sentiment, analysts said. The US has registered an average of 67,175 new cases per day in the past week, 4% more than the average of two weeks ago. But according to the Washington Post, the global number of new cases nearly hit a record high of more than 750,000 on Sunday and Monday as India and Brazil remain hot spots.

See: Why the increase in COVID-19 cases keeps Morgan Stanley bullish on risky assets

“Concerns are growing that the spread of covid outside the US could impede the global economic recovery and impede the guidelines of US companies as they report, particularly multinational corporations,” said Fiona Cincotta, senior financial markets analyst at City Index. , in a note.

Which companies is the focus on?

• Apple inc.
  AAPL,
  -1.25%
  was expected on Tuesday to provide an annual update for high-end iPads, along with other new products, and introduce a paid subscription option in its podcast app when it holds an event in New York. Apple shares rose 0.1%.

• Shares of International Business Machines Corp.
  IBM,
  + 4.30%
  were up 4% after the technology giant surpassed Wall Street estimates with a surprise increase in sales and broke a four-quarter string of sales declines.

• United Airlines Holdings Inc.
  UAL,
  -8.93%
  lost more than $ 1.3 billion in the first three months of 2021, but executives said a revised cash flow measure turned to positive and promised that new international routes to countries allowing vaccinated travelers will help the airline recover from the devastation of the country. COVID-19 pandemic. Shares fell by more than 7%.

• Johnson & Johnson
  JNJ,
  + 2.48%
  OnTuesday reported first-quarter earnings and revenues that exceeded expectations, citing the strength of the pharmaceutical business and the continued recovery in medical devices. Shares rose 1.4%.

• Shares of Abbott Laboratories
  ABBOT,
  -4.28%
  4%, despite the company delivering results that exceeded earnings expectations during a quarter where sales of its COVID-19 tests accounted for 20% of total revenue.

• Shares of Procter & Gamble Co.
  PG,
  + 0.98%
  fell 0.4% after the consumer staples producer reported a third-quarter profit that was higher than estimates and said it would raise prices for certain product categories.

• Shares of Kansas City South
  KSU,
  + 16.08%
  rose 15% after The Wall Street Journal reported it Canadian National Railway Co.
  CNI,
  -6.15%

  CNR,
  -6.18%
  planned to make a buyout offer on the rail operator of approximately $ 30 billion, which would be the highest From Canadian Pacific Railway Ltd.
  CP,
  -1.83%

  CP,
  -1.65%
  previously agreed buyout offer.

• Shares of Philip Morris International Inc. PM rose 0.6% after the cigarette seller reported first-quarter earnings and revenues that exceeded expectations, as growth in heated tobacco unit shipments helped offset declines in cigarette deliveries.

See: Tobacco stocks are incinerated after reports that Biden’s administration may require nicotine savings

What are other markets doing?

• The return on the 10-year treasury BX: TMUBMUSD10Y
  declined 0.5 basis point to 1.589% as the bond market remained in consolidation mode after a recent short-term rally dropped interest rates from its 14-month high. Yields and bond prices move in opposite directions.

• The ICE US Dollar Index DXY,
  + 0.07%
  a measure of the coin against a basket of six major rivals, was flat.

• Oil futures were up slightly, with the US benchmark CLM21,
  -1.69%
  0.3% higher at $ 63.63 a barrel.

• Gold futures GC00,
  + 0.47%
  Early weakness erased to move higher, up 0.4% to $ 1,777 an ounce.

• In Europe the Stoxx is 600 SXXP,
  -1.90%
  and the FTSE 100 UKX in London,
  -2.00%
  were each 1.5% lower.

• In Asia, Hong Kong’s Hang Seng Index HSI,
  + 0.10%
  rose 0.1%, while the Shanghai Composite SHCOMP,
  -0.13%
  fell 0.1% and Japan’s Nikkei 225 NIK,
  -1.97%
  2% down.