US stocks fall amid earnings flurry; bonds climb - BNN

U.S. stocks fell as traders assessed corporate earnings amid a resurgence in global coronavirus cases. Bonds rose.

The S&P 500 trimmed its monthly gain as worse-than-estimated results from McDonald’s Corp., 3M Co. and Harley-Davidson Inc. sent the shares slumping. Pfizer Inc. climbed after the drugmaker raised its earnings forecast and began a later-stage trial for a coronavirus vaccine with its German partner. Eastman Kodak Co. soared on news that it received a U.S. government loan.

Some of the largest companies report earnings this week, and investors will look for clues on whether a resurgence of COVID-19 around the world will derail a recovery of corporate profits and the economy. The Federal Reserve extended most of its emergency lending programs by three months, through the remainder of 2020. A drop in consumer confidence added to evidence that the pace of the rebound is cooling as the virus interrupts reopenings in several states.

“We’ve seen a number of beneficiaries of the lockdowns and a lot of companies really hurt by the lockdowns,” said Bill McMahon, chief investment officer of active strategies for Charles Schwab Investment Management. “There is still a lot of uncertainty about the rest of the year in how they guide.”

The pandemic continues to rage in parts of the U.S., hot spots in Europe and across big emerging economies including India and Brazil. With little prospect of a circuit breaker until a vaccine is discovered and distributed, governments are having to double down on the US$11 trillion dollars worth of stimulus and unprecedented central bank support unleashed since the crisis began. The Fed meets this week to decide on interest rates as U.S. lawmakers debate another US$1 trillion fiscal stimulus package.

“There’s enough stimulus and support in the market from a monetary policy perspective, but also from fiscal, and that keeps a nice floor under the market,” said Amanda Agati, chief investment strategist for PNC Financial Services Group. “But we also think it’s going to be very difficult to make a lot of forward progress in this environment.”

Nasdaq’s biggest companies may struggle to surpass a performance milestone from the height of the 1990s dot-com era, according to Julian Emanuel, head of equity and derivatives strategy at BTIG LLC.

The Nasdaq-100 was leading the S&P 500 for a 10th straight month as of Monday, according to data compiled by Bloomberg. If the Nasdaq-100 hangs onto the lead through Friday, it will match a record streak between May 1999 and February 2000 — the final months before both indexes peaked. The latest run is at risk because of “poor share-price reactions to otherwise solid earnings reports” and other issues, he wrote.

Here are some key events coming up:

The Federal Open Market Committee holds its policy meeting on Tuesday, with an announcement due on Wednesday.

Earnings include Rio Tinto and Barclays on Wednesday; Thursday brings Apple, Amazon.com, Alphabet, L’Oreal, Credit Suisse and Samsung; Chevron and Caterpillar are set for Friday.

U.S. second-quarter GDP is expected on Thursday.

China PMI data comes Friday.

These are some of the main moves in markets:

Stocks

The S&P 500 declined 0.2 per cent as of 12:39 p.m. New York time.

The Stoxx Europe 600 Index advanced 0.4 per cent.

The MSCI Asia Pacific Index climbed 0.5 per cent.

Currencies

The euro declined 0.2 per cent to US$1.1732.

The Japanese yen appreciated 0.3 per cent to 105.10 per U.S. dollar.

Bonds

The yield on 10-year Treasuries sank two basis points to 0.59 per cent.

Germany’s 10-year yield fell two basis points to -0.51 per cent.

Britain’s 10-year yield was unchanged at 0.109 per cent.

Commodities

The Bloomberg Commodity Index fell 0.1 per cent.

West Texas Intermediate crude decreased 1.3 per cent to US$41.06 a barrel.

Gold strengthened 0.3 per cent to US$1,948.05 an ounce.

—With assistance from Gregor Stuart Hunter, Andreea Papuc, Todd White, Lynn Thomasson, David Wilson and Amena Saad.

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2020-07-28 17:15:00Z
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