U.S. stocks fell Monday, with major indexes dropping in a broad decline as the latest round of positive corporate earnings failed to excite investors.
Despite the declines on the day, major indexes ended the month of April with gains.
What did the main benchmarks do?
The Dow Jones Industrial Average DJIA, -0.61% fell 148 points, or 0.6%, to 24,163.15. The S&P 500 SPX, -0.82% declined 21.86 points, or 0.8%, to 2,648, its first decline of the past four sessions. The Nasdaq Composite Index COMP, -0.75% fell 53.5 points, or 0.8%, to 7,066.
All 11 S&P 500 sectors ended lower on the day, as did 25 of the 30 Dow components. Health care, with a decline of 1.6%, was among the biggest declining sectors of the day. The industry was pressured by a downdraft in the biotechnology sector, with the iShares Nasdaq Biotechnology ETF IBB, -1.86% down nearly 2%.
Materials and industrial stocks also fell more than 1%, while energy stocks ended flat. Energy had previously been the top performer of the day as political uncertainty in the Middle East lifted crude prices.
For the month, the Dow rose 0.3%, cutting its year-to-date loss to 2.3%. The S&P rose 0.3% in April; it is down 1% in 2018. The tech-laden Nasdaq rose less than 0.1% on the month, with a year-to-date advance of 2.4%.
What’s driving markets?
April’s gains have come as more than half of the S&P 500’s companies have posted first-quarter results, with 79% of those names beating Wall Street’s expectations for earnings, according to FactSet data.
But strategists say the market’s advance has been limited by other factors, including worries about protectionism and geopolitics, as well as concerns that the days of synchronized global economic growth are over.
The prospect of a trade war between the U.S. and China is one of those worries, so traders are likely to watch U.S. Treasury Secretary Steven Mnuchin’s visit to China this week for high-level trade talks.
Investors also have been tracking the 10-year Treasury yield TMUBMUSD10Y, +0.13% , which last week climbed above 3% for the first time since 2014, but then slipped back under that psychologically important level. A jump for that benchmark rate tends to peel money away from riskier assets such as equities.
What are strategists saying?
“There’s some caution about what the summer might bring, especially since stocks are up some 40% over the past year and a half,” said Phil Orlando, chief equity market strategist at Federated Investors.
“There’s no shortage of things that can make you nervous, including North Korea, Iran, the Mueller investigation, the midterms, upcoming Fed meetings and so forth. We think the market will continue to move higher, but there’s a lot of caution that is obscuring the good news in earnings.”
Which stocks are in focus?
Shares in burger chain McDonald’s Corp. MCD, +5.77% rose 5.6% after reporting better-than-expected profit and revenue for the first quarter. The stock was the biggest advancer by far among Dow components.
Celgene Corp. CELG, -4.47% fell 4.5% after a Morgan Stanley report predicted a one- to three-year delay on any new attempt to file for U.S. approval of the company’s highly anticipated drug ozanimod, which is designed to treat multiple sclerosis.
Sprint Corp. shares S, -13.69% fell 14% following news Sunday that the wireless carrier plans to merge with rival T-Mobile US Inc. TMUS, -6.22% .
T-Mobile’s stock dropped 6.2%. The two companies struck an all-stock $26 billion deal that, if allowed by antitrust regulators, would leave the U.S. wireless market dominated by three national players. It is the third time in recent years that the two rivals have attempted to merge.
In other deal news, Walmart Inc. shares WMT, +1.34% advanced 1.3% after the retail giant’s U.K. arm, ASDA Group Ltd., agreed to merge with British supermarket chain J Sainsbury PLC SBRY, +14.53% . The combined entity would have annual revenue of about $69 billion.
Marathon Petroleum Corp. MRO, +0.77% has confirmed that it plans to buy rival refiner Andeavor ANDV, +13.03% in a deal valued at more than $20 billion. Andeavor’s stock jumped 13%, while those for Marathon were up by 0.8%.
Logistics company Prologis Inc. PLD, -2.51% has agreed to buy competitor DCT Industrial Trust Inc. DCT, +11.61% for $8.4 billion including debt, as a surge in e-commerce ramps up demand for warehouses and distribution centers. DCT shares climbed 11.6%, while those for Prologis fell by 2.5%.
Arconic Inc.‘s ARNC, -20.63% stock fell 21% after the metals company reduced its outlook but produced results that outpaced forecasts.
U.S.-listed shares in WPP PLC WPP, +8.48% WPP, +8.62% jumped 8.5% after the advertising giant’s first-quarter results beat expectations, in the first earnings report after the departure of Martin Sorrell as chief executive.
AK Steel Holding Corp. AKS, -3.37% slipped 3.4% after reporting first-quarter results, with revenue coming in better than expected. The mining company also offered a bullish outlook, saying that it expected market conditions to improve.
Which data are in focus?
The PCE index, the Federal Reserve’s preferred inflation gauge, rose to 2% year-over-year from a 1.7% pace in February, hitting the central bank’s target for the first time in a year.
The inflation figures are included in the government’s monthly report on consumer spending. Outlays rose 0.4% last month to mark the first advance since the end of 2017.
A report on Chicago-area manufacturing, Chicago PMI, for April came in at 57.6, compared with consensus estimates for 58. A reading of 50 or better indicates improving conditions.
Meanwhile, the pending-home sales index from the National Association of Realtors crept up 0.4% to 107.6 in March from a downwardly revised February reading.Which stocks are in focus?
Shares in burger chain McDonald’s Corp. MCD, +5.77% rose 5.6% after reporting better-than-expected profit and revenue for the first quarter. The stock was the biggest advancer by far among Dow components.
Celgene Corp. CELG, -4.47% fell 4.5% after a Morgan Stanley report predicted a one- to three-year delay on any new attempt to file for U.S. approval of the company’s highly anticipated drug ozanimod, which is designed to treat multiple sclerosis.
Sprint Corp. shares S, -13.69% fell 14% following news Sunday that the wireless carrier plans to merge with rival T-Mobile US Inc. TMUS, -6.22% .
T-Mobile’s stock dropped 6.2%. The two companies struck an all-stock $26 billion deal that, if allowed by antitrust regulators, would leave the U.S. wireless market dominated by three national players. It is the third time in recent years that the two rivals have attempted to merge.
In other deal news, Walmart Inc. shares WMT, +1.34% advanced 1.3% after the retail giant’s U.K. arm, ASDA Group Ltd., agreed to merge with British supermarket chain J Sainsbury PLC SBRY, +14.53% . The combined entity would have annual revenue of about $69 billion.
Marathon Petroleum Corp. MRO, +0.77% has confirmed that it plans to buy rival refiner Andeavor ANDV, +13.03% in a deal valued at more than $20 billion. Andeavor’s stock jumped 13%, while those for Marathon were up by 0.8%.
Logistics company Prologis Inc. PLD, -2.51% has agreed to buy competitor DCT Industrial Trust Inc. DCT, +11.61% for $8.4 billion including debt, as a surge in e-commerce ramps up demand for warehouses and distribution centers. DCT shares climbed 11.6%, while those for Prologis fell by 2.5%.
Arconic Inc.‘s ARNC, -20.63% stock fell 21% after the metals company reduced its outlook but produced results that outpaced forecasts.
U.S.-listed shares in WPP PLC WPP, +8.48% WPP, +8.62% jumped 8.5% after the advertising giant’s first-quarter results beat expectations, in the first earnings report after the departure of Martin Sorrell as chief executive.
AK Steel Holding Corp. AKS, -3.37% slipped 3.4% after reporting first-quarter results, with revenue coming in better than expected. The mining company also offered a bullish outlook, saying that it expected market conditions to improve.
Which data are in focus?
The PCE index, the Federal Reserve’s preferred inflation gauge, rose to 2% year-over-year from a 1.7% pace in February, hitting the central bank’s target for the first time in a year.
The inflation figures are included in the government’s monthly report on consumer spending. Outlays rose 0.4% last month to mark the first advance since the end of 2017.
A report on Chicago-area manufacturing, Chicago PMI, for April came in at 57.6, compared with consensus estimates for 58. A reading of 50 or better indicates improving conditions.
Meanwhile, the pending-home sales index from the National Association of Realtors crept up 0.4% to 107.6 in March from a downwardly revised February reading.
Federal Reserve policy makers are slated to start a two-day meeting Tuesday, and they are expected on Wednesday to leave interest rates on hold and signal no change to a tightening path of two more rate increases in 2018.
What are other markets doing?
European stocks SXXP, +0.18% closed mostly higher, while Asian markets closed with gains.
Gold futures GCM8, -0.40% fell 0.6% while oil futures CLM8, +0.07% turned higher, while the ICE U.S. Dollar Index DXY, +0.05% advanced 0.3%, capping its best month since February 2017.
