the Wall Street’s blue-chip index Dow Jones Industrial Average declined for the second consecutive session on Tuesday amid the expectations of the investors for the start of the corporate reporting season later this week.
Dow Jones wiped out 190.44 points of its value and ended the day at 26,150.58 points with Boeing’s stock performing badly due to concerns about the slowdown in the 737 MAX production. The broader benchmark S&P 500 declined by 0.61% to 2,878.20 points, mainly due to the losses of industrial, energy and financial companies. The technology index Nasdaq Composite fell by 0.56% to 7,909.28 points, with the stocks of Microsoft, Apple, Amazon, and Alphabet declining.
Dow Jones and S&P 500 ended their worst performing session since March 22, and the Nasdaq Composite recorded its biggest decrease since March 27.
Trade tensions between the US and the EU intensified on Tuesday, pending a World Trade Organization (WTO) decision on subsidies for Airbus, which, according to the United States, has caused “negative consequences for the US economy”. This has led Washington to consider imposing tariffs for a range of European goods worth 11 billion USD. On Tuesday, Brussels responded to planned US tariffs, saying it was ready to take similar measures.
Meanwhile, the fears over global growth resurfaced, prompting investors to hold off of risky bets after the IMF cut its global growth outlook, citing Brexit-related uncertainties and US-China trade tensions. The IMF sees global economic growth of 3.3% this year, down from the 3.5% it forecast in January.
On the bond markets, the yields on 10-year and 30-year US government securities declined to 2.504% and 2.915%, respectively.
Corporate stocks performance
The stocks of Bank of America, Goldman Sachs, J.P. Morgan, and Morgan Stanley declined by at least 0.5% on Tuesday.
The stocks of Boeing dropped by nearly 1.5% as investors are worried about the last Friday’s decision to cut production of 737 MAX aircraft. Regulators and shareholders are watching the company carefully and operations of Boeing 737 MAX are suspended until the release of an update for the flight control system.
The grounding of 737 MAX forced American Airlines to lower its revenue expectations for the first fiscal quarter. The airline has reduced its earnings growth per mile, a key indicator for the companies’ performance in the industry, between 0% and 1% compared to forecasts between 0% and 2% previously. Thus, the stocks of American Airlines ended the trading session with a decrease of 1.68%.
Caterpillar’s stock declined by 2.4%, while Deere shares fell by 3.7%.
At the same time, Disney shares rose by 1.6% after Cowen raised the company’s rating and told its customers that its movies would support the profits in the next few years.
The best performers within S&P 500 were Cerner (+10.3%), Monster Beverage (+3.05%) and Campbell Soup (+2.49%), while on the opposite side were Pentair (-13.5%), Under Armour (-4.7%) and Advanced Micro Devices (-4.5%).
Corporate reporting season
The market attention is focused on corporations’ results, with big US banks opening the reporting season later this week. J.P. Morgan Chase and Wells Fargo will be publishing their latest earnings data on Friday, and Citigroup and BlackRock will follow them next week.
Wall Street expects significant reductions in corporate earnings growth over this reporting season compared to recent quarters.
The estimated earnings decline for the S&P 500 is -4.2%, which will mark the first year-over-year decline in earnings for the index since Q2 2016. The revenues of the above-mentioned companies are expected to grow by just under 5%.
Corporate earnings reports
Levi Strauss & Co reported its first quarterly earnings since its initial public offering (IPO) on the New York Stock Exchange last month. For the first quarter, Levi said it swung to earnings of 146.6 million USD, or 0.37 USD per share, from a loss of 19 million USD or 0.05 USD per share, a year ago. Meanwhile, the company’s revenue rose 7% to 1.44 billion USD from the prior period. It was up 11% on a constant currency basis.