U.S. stocks edge lower as earnings season kicks off, J&J pauses coronavirus vaccine trial

U.S. stocks traded slightly lower early Tuesday as investors parsed earnings from some of the biggest financial institutions, to start the third-quarter reporting season.

Wall Street participants also were watching a number of corporate events, including the start of Amazon’s two-day Prime Day sales event and Apple’s rollout of its latest iPhone lineup.

How are stock benchmarks performing?

The Dow Jones Industrial Average DJIA, -0.24% fell 38.18 points, or 0.1%, to 28,799.34, while the S&P 500 SPX, -0.26% was down 6.10 points, or 0.2%, at 3,528.12. The Nasdaq Composite COMP, 0.33% was off 34.64 points, or 0.3%, at 11,841.62.

On Monday, the Dow rose 250.62 points, or 0.9%, to 28,837.52. The S&P 500 added 57.09 points, or 1.6%, to 3,534.22 while the Nasdaq Composite climbed 296.32 points, or 2.6%, to 11,876.26. It was the fourth straight day of gains for all three benchmark indexes.

What’s driving the market?

Investors were digesting a number of major corporate events that were likely to set the tone for the trading session on Tuesday, including earnings results from JPMorgan Chase JPM, -1.34%, which produced better-than-expected earnings but delivered slightly weaker-than-expected revenues.

The nation’s largest bank said Tuesday it had net income of $$9.443 billion, or $2.92 a share in the third quarter, compared with $9.080 billion, or $2.68 a share, in the year-earlier period. However, revenue fell to $29.941 billion from $30.014 billion. The main reason for the surge in EPS was a fall in loan loss provisions which dropped by 90% to only $611 million.

Citigroup Inc. C, -3.45% also reported third-quarter profit and revenue that topped expectations, helped by strength in its institutional clients business and stabilizing credit costs. BlackRock Inc. BLK said that its quarterly profit rose by 22% as investors flocked to its suite of investment funds amid a volatile period, but a mostly dramatic rise, in equity markets.

Meanwhile, pharmaceutical giant Johnson & Johnson JNJ, -2.21% announced a pause of all of its COVID-19 vaccine trials, highlighting the challenges of producing a cure for the virus that has infected more than 37 million people globally so far, according to data aggregated by Johns Hopkins University.

Beyond earnings, the kick off Amazon.com‘s AMZN, 0.95% two-day sales event and the presumed launch of Apple Inc.’s AAPL, -0.12% new iPhone roster of 5-G enabled phones are expected to draw attention, as investors assess how consumers respond in the era of a pandemic that has weakened the economy.

Stalled talks in Congress around another package of coronavirus financial assistance were still on the mind of the market and come against the backdrop of reports of the smallest increase in new coronavirus infections in a week in the U.S.

“On the political front, not much is changing as [Democratic challenger Joe] Biden continues to hold a considerable lead [over President Donald Trump] nationally as well as in key swing states like Pennsylvania, Michigan, and Wisconsin,” said Yousef Abbasi, global market strategist at StoneX, in a note.

Investors have become comfortable with the potential for a Democratic party sweep of both the White House and Congress on expectations that such an outcome would lead to a larger, near-term fiscal stimulus package early next year, analysts said.

“The latest stimulus narrative suggests nothing in the near-term but the prospects of the ‘Blue Wave’ certainly paves the way for larger, future stimulus. In the meantime, the markets appear to be balancing COVID concerns with the political outlook and the prospects of stimulus,” Abbasi said.

Still, hospitals in some parts of the country are seeing a rise in the number of coronavirus patients ahead of the winter flu season. U.S. hospitalizations are at the highest level since Sept. 2, according to data from the COVID Tracking Project, The Wall Street Journal reported.

In economic data, the September consumer-price index rose 0.2%, in line with forecasts.

Which stocks are in focus?

  • Shares of JPMorgan Chase fell 1% after it announced third-quarter results.
  • Walt Disney Co. shares DIS, 4.96% jumped3.7% Tuesday after the entertainment giant late Monday announced a strategic reorganization of its media and entertainment businesses to focus on streaming.
  • Amazon.com shares were off 0.3% as the company is expected to generate some $10 billion in sales from its Prime Day sales event, experts say.
  • Apple Inc. AAPL, -0.12% shares were down 1.7% before Tuesday’s event.
  • Shares of J&J were down 1.7% after the company announced the pause of its COVID-19 trial.
  • BlackRock‘s stock rose 3.8% after its results.
  • Citigroup shares fell 0. 9% after its earnings release.

What are other markets doing?

The yield on the 10-year Treasury note TMUBMUSD10Y, 0.734% fell 3.8 basis points to 0.738%. Yields and bond prices move in opposite directions.

In global equities, the Shanghai Composite SHCOMP, +0.03% rose marginally, while Japan’s Nikkei 225 Index NIK, +0.18% gained 0.2%. The pan-European Stoxx 600 Europe index SXXP, -0.71% was down 0.7%, while London’s FTSE 100 stock index UKX, -0.75% lost 0.5%.

Oil futures rebounded, with the U.S. benchmark CL.1, 1.60% up 1.6% after data showed a rise in Chinese crude imports. Gold futures GOLD, -1.39% were down 1.5%.

The ICE U.S. Dollar Index DXY, 0.45%, a measure of the currency against a basket of six major rivals, was up 0.3%.

This article was originally posted on MarketWatch.