Investors look forward to Fed policy meeting conclusion
U.S. stocks closed mixed Tuesday, with the S&P 500 eking out a third consecutive record close, as investors reacted to disappointing sales figures from Google-parent Alphabet Inc., which weighed on technology shares.
How did the major indexes perform?
The Dow Jones Industrial Average DJIA, +0.15% gained 38.52 points to 26,592.91, or roughly 0.2%, but off its intraday low at 26,419.47 while the S&P 500 index SPX, +0.10% gained 2.8 points, or 0.1%, or to close at 2,945.83, well of its Tuesday low at 2,924.21. Meanwhile, The Nasdaq Composite Index NQM9, +0.70% fell 54.09 points, or 0.7%, to finish at 8,107.77, but off a low at 8,050.55.
While the S&P 500 edged further into record territory, the Nasdaq pulled back from its record finish set on Monday. The Dow remains 0.9% away from its record closing high, set on Oct. 3.
For the month of April, the Dow rose 2.6%, while the S&P added 3.9%, and the Nasdaq rose 4.9%.
What drove the market?
Shares of Google parent Alphabet Inc. GOOG, -0.04% GOOGL, -0.10% fell 8.4% Tuesday, after its results late Monday showed revenue growth cooled off in the first quarter, with all major sales categories performing slightly worse than projected. The decline of one of the largest companies by market capitalization and a member of the so-called FAANGs group, was dragging the broader market lower with a particular weight on the buzzy technology sector.
Meanwhile, a private gauge of China factory activity weakened in April but still showed expansion, in line with official data that also showed slower growth. The Caixin China manufacturing purchasing managers index dropped to 50.2 in April from 50.8 in March, holding above the 50 level that indicates an expansion in activity. Earlier, the official manufacturing PMI fell to 50.1 in April from 50.5 in March.
Elsewhere, the eurozone regained some lost momentum at the start of 2019, according to Tuesday data, which showed combined gross domestic product for the 19-nation region rose by an annualized 1.5% in the first quarter, accelerating from a 0.9% growth rate in the final quarter of 2018.
Looking ahead, Federal Reserve policy makers are fully expected to leave interest rates on hold when they conclude a two-day meeting Wednesday, but the statement and remarks by Fed Chairman Jerome Powell will be closely watched on Wednesdays for clues to the central bank’s economic outlook, after it abruptly paused its plan for rate increases in January.
What companies were in focus?
Shares of General Electric Co. GE, -0.20% jumped 4.5%, after topping Wall Street’s first-quarter profit and revenue expectations.
Occidental Petroleum Corp. OXY, +0.25% shares were in focus Tuesday, after the company said that Warren Buffett’s Berkshire Hathaway Inc. BRK.B, +0.06%has committed to a preferred equity investment of $10 billion, in connection with the oil company’s proposal to acquire Anadarko Petroleum Corp. APC, -0.14%
McDonald’s Corp. MCD, -0.21% stock rose 0.2% Tuesday, after the fast-food giant and Dow component reported global, same-store sales growth of 5.4%, above analyst forecasts, but earnings that fell short.
Shares of General Motors Co. GM, +0.13% fell 2.7% after the auto maker reported first-quarter earnings that beat expectations, but revenue fell more than expected.
Perrigo Co. PLC PRGO, -1.17% shares fell 6.8% Tuesday, after the company disclosed in a regulatory filing that the IRS claims it owes $843 million in unpaid taxes, including a 40% penalty, related to its 2013 acquisition of Elan Corp.
Merck & Co. Inc. MRK, +0.29% shares rose 2.5%, after the drug company posted stronger-than-expected first-quarter earnings and raised guidance for the full year. Fellow Dow component and pharmaceutical giant Pfizer Inc. PFE, +0.47%also surpassed Wall Street forecasts for the first quarter, while raising its guidance. Shares rose 2.6% Tuesday.
Ely Lilly & Co. LLY, -0.12% stock declined 3.2% early Tuesday, after the drug giant reported first-quarter earnings that topped expectations, but revenue that missed.
Mastercard Inc. MA, +0.48% stock rose 2.4%, after the credit card network surpassed earnings and revenue expectations for the first quarter.
Shares of ConocoPhillips COP, +1.31% rose 1.8% Tuesday after the oil company reported better-than-expected profit for the first quarter.
Lumber Liquidators Holdings Inc. LL, +3.10% shares rose 2.7%, even after the wood flooring retailer posted a first-quarter loss and sales that fell short of expectations.
Apple Inc. AAPL, +4.95% is due to report earnings after the closing bell.
What did the analysts say?
“We’re knee-deep in earnings season now, and today’s reports are a mixed bag,” Patrick Healey president of Caliber Financial Partners told MarketWatch, noting that results from Alphabet were in contrast to those of fellow online ad giant, Facebook Inc. FB, +0.49% which surpassed investor expectations last week, and that Eli Lilly’s results Tuesday morning were more disappointing than rivals Pfizer and Merck.
“We’re near all-time highs, and investors are waiting for a catalyst to drive the market in the second half” of 2019, he added.
What was on the economic calendar?
The employment cost index rose by 0.7% during the first three months of the year, in line with economists expectations, per a MarketWatch poll. Year-over-year compensation growth advanced 2.8%, a tick down from the annual rate during the last three months of 2018.
The Case-Shiller house price index for February showed growth slowed to a 6½-year low, while the Chicago-area purchasing managers index for April is set for release at 9:45 a.m.
The Conference Board said its consumer-confidence index rose to 129.2 in Aprilfrom 124.2 a month earlier. A National Association of Realtors index of pending home sales surged 3.8% in March, versus a forecast for a 0.7% rise.
How did other markets trade?
Asian stock markets closed on a mixed note Tuesday, with the Shanghai Composite Index SHCOMP, +0.52% and the Shenzhen Composite index399106, +0.68% both closing higher, despite new data showing a slowing Chinese manufacturing sector.
Hong Kong’s Hang Seng Index HSI, -0.65% meanwhile, fell 0.7% while South Korea’s SEU, -0.58% also retreated on the day. In Europe, stocks closed flat, with the Stoxx Europe 600 SXXP, +0.03% virtually unchanged on the day.
The price of oil CLM9, -0.69% rose during a volatile day of trade. Gold pricesGCM9, -0.22% ended lower, while the U.S. dollar edged lower.