The S&P 500 edged up on Tuesday, as gains in several large technology firms offset dismal quarterly results from Johnson & Johnson and Goldman Sachs as the first-quarter earnings season got underway.
The Dow and Nasdaq finished the day with tiny losses.
J&J’s (JNJ.N) stock dropped 2.8% after the healthcare company warned investors about the lingering effect of inflation-driven prices this year. Goldman Sachs (GS.N) shares dipped 1.7% after the Wall Street firm’s earnings plummeted 19% due to a reduction in dealmaking and bond trading.
The early quarterly reports from S&P 500 businesses come as investors prepare for a bleak reporting season, worrying the economy is on the verge of a slump.
“What we are seeing here is the calm before the storm as far as earnings go,” said Brad McMillan, chief investment officer of Commonwealth Financial Network. “The market is just trying to see, do we have some upside here or not, and I think it is really going to come down to earnings over the next couple of weeks.”
The Dow Jones Industrial Average (.DJI) lost 10.55 points, or 0.03%, to 33,976.63, the S&P 500 (.SPX) rose 3.55 points, or 0.09%, to 4,154.87, and the Nasdaq Composite (.IXIC) sank 4.31 points, or 0.04%, to 12,153.41.
During the day, the CBOE Volatility Index (.VIX), often known as Wall Street’s fear barometer, plummeted to its lowest level since January 2022.
Due to a 2.5% increase in Nvidia Corp (NVDA.O) shares after HSBC changed the graphics chipmaker’s rating from “reduce” to “buy,” the heavyweight technology sector (.SPLRCT) increased by 0.4%.
J&J shares led a 0.7% decline in the healthcare sector (.SPXHC).
According to Refinitiv IBES statistics as of Friday, S&P 500 corporate profits are estimated to have fallen 4.8% year over year in the first quarter. Following the fall of Silicon Valley Bank last month, which raised worries about possible systemic risks, investors have focused on bank earnings.
“While the big money center banks did very well as a whole, the focus I think is going to be on the regional banks because that is really where the center of the fallout was,” said Paul Nolte, senior wealth advisor and market strategist at Murphy & Sylvest Wealth Management.
Netflix Inc. (NFLX.O) shares dipped in after-hours trade on Tuesday after the company’s quarterly report.
The S&P 500 is trading at two-month highs as investors await a flood of results and analyse the interest rate path ahead of the Federal Reserve’s meeting early next month, which is projected to result in a 25 basis point hike.
St. Louis Federal Reserve President James Bullard told Reuters on Tuesday that the United States’ central bank should keep increasing interest rates in light of recent statistics indicating sustained inflation. Separately, Atlanta Fed President Raphael Bostic said that the Fed would most certainly raise interest rates again.
In other earnings news, Lockheed Martin Corp. (LMT.N) climbed 2.4% as the U.S. weapons manufacturer’s first-quarter results exceeded Wall Street expectations amid component and labour shortages.
On the NYSE, advancers outweighed decliners by a 1.01-to-1 ratio; on the Nasdaq, decliners outnumbered advancers by a 1.29-to-1 ratio.
The S&P 500 had 28 new 52-week highs and no new lows, while the Nasdaq Composite saw 66 new highs and 143 new lows.
In the United States, around 9.8 billion shares changed hands, compared to the 10.7 billion daily average over the previous 20 sessions.