U.S. stocks fell Tuesday after markets staged a rebound to end higher in the previous trading session. Investors are looking ahead to a batch of mega cap tech earnings in the coming days, with reports from Microsoft (MSFT) and Alphabet (GOOGL) due out after the bell.
The S&P 500 dipped 0.7% at the start of trading, while the Dow Jones Industrial Average shed 230 points after the index staged a 500-point recovery on Monday to close in the green. The tech-heavy Nasdaq Composite tumbled 1.1%.
Investors are in the heart of earnings season, with the S&P 500’s most heavily-weighted components scheduled to report earnings results this week. Facebook parent company Meta (FB), Apple (AAPL), and Amazon (AMZN) are also set to report quarterly results through Thursday.
As of Friday, one-fifth of companies in the index have reported results for the first quarter so far, with 79% reflecting an earnings beat for the period – above the five-year average of 77%, according to the latest available data from FactSet. The magnitude of the earnings beat, however, is below the five-year average: 8.1%, compared to 8.9%.
“The lower earnings growth rate for Q1 2022 relative to recent quarters can be attributed to both a difficult comparison to unusually high earnings growth in Q1 2021 and continuing macroeconomic headwind,” John Butters, a FactSet senior earnings analyst, said in a note.
U.S. stocks paralleled movements in global equity markets on Monday, with major stock indexes in Europe and Asia largely falling on renewed concerns a COVID outbreak in China may spur another wave of lockdowns and further disrupt global supply chains.
Worries of an economic slowdown also weighed on bonds and oil, with the 10-year Treasury yield retreating back to 2.8% and West Texas intermediate crude oil futures edging below $100 per barrel.
“I think the most interesting thing happening in China right now is not that the yuan’s moving and not that the economy’s slowing – it’s that everything that’s happening right now, we knew weeks ago,” China Beige Book CEO Leland Miller told Yahoo Finance Live. “We knew that the economy was slowing, we knew they were not going to stimulate in a big way, we knew that lockdowns were spreading from Shanghai to other big cities, we knew the Fed was hiking, we knew there’s a policy crackdown, so it is interesting that people are seeing today as a pivotal moment.”
Elsewhere in markets, shares of Twitter jumped 5.7% after the social media giant formally announced it agreed to be acquired by Tesla CEO Elon Musk for $54.20 per share, or $44 billion. Twitter shareholders are set to receive $54.20 in cash for each share held, representing a 38% premium over Twitter’s closing level on April 1.
“This is the best thing that’s ever happened to Twitter,” Hedge Fund Tips’ Thomas Hayes told Yahoo Finance Live. “Elon Musk is going to rehab the building and generate a lot of value for users.”
9:30 a.m. ET: Stocks resume losses to extend April sell-off
Here’s where the main indexes were at the start of trading on Tuesday:
S&P 500 (^GSPC): -22.31 (-0.52%) to 4,273.81
Dow (^DJI): -224.66 (-0.66%) to 33,824.80
Nasdaq (^IXIC): +165.56 (+1.29%) to 13,004.85
Crude (CL=F): +$1.65 (+1.67%) to $100.19 a barrel
Gold (GC=F): +$10.90 (+0.57%) to $1,906.90 per ounce
10-year Treasury (^TNX): -7.7 bps to yield 2.7490%
9:23 a.m ET: Home prices jump nearly 20% during February
Home price growth in the U.S. accelerated during the month of February, but a slowdown may be underway.
Standard & Poor’s reprted Tuesday that its S&P CoreLogic Case-Shiller national home price index registered a 19.8% gain during the second month of the year, up from 19.1% in January. The figure marks the third-highest reading since the index was developed in the 1980s.
The 20-City results were higher than analysts’ expectations of an 19.2% annual gain, according to Bloomberg consensus estimates.
The 10-City Composite annual increase came in at 18.6%, up from 17.3% in the previous month. The 20-City Composite posted a 20.2% year-over-year gain, up from 18.9% in the previous month.
“The macroeconomic environment is evolving rapidly and may not support extraordinary home price growth for much longer,” said Craig J. Lazzara, managing director and global head of index investment strategy at S&P DJI, in a statement. “The post-COVID resumption of general economic activity has stoked inflation, and the Federal Reserve has begun to increase interest rates in response.”
“We may soon begin to see the impact of increasing mortgage rates on home prices,” he added.
9:09 a.m ET: PepsiCo ups full-year revenue forecast on higher prices, soda demand
PepsiCo (PEP) reported higher than expected quarterly earnings of $1.29 per share, beating the $1.23 per share analysts had expected, according to Bloomberg consensus data.
The beverage and snacks maker also raised its full-revenue forecast, buoyed by higher prices and a rebound in demand for its sodas at theaters and restaurants. Pepsi now anticipates fiscal 2022 organic revenue to rise 8%, compared with its forecast of a 6% increase.
During the quarter, the company also reported taking a $241 million charge related to Russia-Ukraine crisis.
“Looking ahead, we will focus on controlling what we can, such as enhancing our focus on productivity and sharpening our revenue management capabilities, while also continuing to make the necessary long-term investments to fortify our businesses and win in the marketplace,” PepsiCo CEO Ramon Laguarta said in the earnings release.
Shares of Pepsi were little changed in pre-market trading.
7:10 a.m. ET: Futures slip after stocks recover from losses in previous session
Here were the main moves in futures trading ahead of Tuesday’s open:
S&P 500 futures (ES=F): -16.50 (-0.40%) to 4,276.25
Dow futures (YM=F): -130.00 (-0.38%) to 33,835.00
Nasdaq futures (NQ=F): -62.50 (-0.46%) to 13,473.25
Crude (CL=F): -$0.35 (-0.36%) to $98.89
Gold (GC=F): +$12.70 (+0.67%) to $1,908.70 per ounce
10-year Treasury (^TNX): 0.00 bps to yield 2.8260%
6:15 p.m. ET Monday: Stock futures muted ahead of earnings reports mega cap earnings
Here’s were stock futures were in post-market trading Monday evening:
S&P 500 futures (ES=F): -1.75 (-0.04%) to 4,291.00
Dow futures (YM=F): -10.00 (-0.03%) to 33,955.00
Nasdaq futures (NQ=F): -19.50 (-0.14%) to 13,516.25
Crude (CL=F): -$0.10 (-0.00%) to $98.66
Gold (GC=F): +$3.20 (+0.17%) to $1,899.20 per ounce
10-year Treasury (^TNX): -8 bps to yield 2.8260%
Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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