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Dow Jones broke its 3-day winning streak

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The NYSE’s blue-chip index Dow Jones Industrial Average broke its 3-day winning streak and reported slight retreat on Tuesday. Among the main reasons for the decline of the index was the stocks depreciation of the holding company Walgreens Boots Alliance.

On Tuesday, Dow Jones Industrial Average wiped out 0.3%, falling to a level of 26,179.13 points. The broader index S&P 500 ended the session on Tuesday almost unchanged at 2,867.24 points. In turn, the Nasdaq Composite technology index added 0.25% to 7,848.69 points.

Dow Jones

The consumer goods and energy sectors were the worst performing in the S&P 500, down by 0.8% and 0.7%, respectively. On this background, the real estate sector reported growth of almost 1%, while raw materials added 0.4%.

On Monday, better-than-expected industry data in the US and China gave a strong boost to US markets, with the Dow crossing the 26,000-point threshold for the first time since February 26, adding more than 300 points. The S&P 500 and Nasdaq also reported growth rates of more than 1%.

The US industrial activity has grown in the previous month, recovering from its lowest level since the end of 2016. A separate study showed that the activity of Chinese factories also grew with its fastest pace in eight months. The data pushed up the yield on US government securities.

On Tuesday, however, there were decreases, with yields on 10-year and 30-year bonds reaching 2.471% and 2.875%, respectively.

Monday morning increases added further momentum to the strong start in 2019 for leading indices. The S&P 500 marks an increase of 13% for the year.

However, growth may be difficult to maintain, according to the analysts. The global economy must remain strong enough to resolve the fears of a recession, but also weak enough for central banks to remain in a wait-and-see mode in monetary policy tightening.

Corporate stocks performance

For individual shares, the Walgreens Boots Alliance dropped nearly 13% due to lower-than-expected earnings. The company also lowered its profit forecast for 2019. Today’s session was the worst for its stock since August 6, 2014, when it fell by 14.3%.

But airline stocks offered investors some reprieve amid a surge in Delta Air Lines of about 6.1% after the carrier lifted its earnings guidance for the first quarter amid “healthy” demand. Meanwhile, United Continental was up by 2.4%, and American Airlines Group gained 2%.

The communications services sector, which houses the bulk of the FANG stocks, also supported the broader market thanks to a 3.3% rally in shares of Facebook amid an upbeat assessment from Deutsche Bank.

Chip stocks were also in favor, helping drive gains in broader tech, led higher by gains for Western Digital (+2.2%), Advanced Micro Devices (+1.5%) and Texas Instruments (+1.5%).

DowDuPont’s spinoff, Dow Chemical, made its trading debut on the NYSE today, ending the day more than 5% higher. Dow’s emergence from DowDuPont marked the first of a trio of splits into three new companies focusing on commodities, agriculture, and specialty products. Dow Chemical, which replaced DowDuPont in the Dow Jones Industrial Average, trades under the ticker DOW. Corteva, the agriculture unit, is set to separate from the new specialty chemical maker DuPont on June 1.

Corporate earnings reports

Walgreens Boots Alliance reported quarterly earnings and revenue that missed analysts’ expectations, and it lowered its forecast for 2019. The company now expects full-year earnings for 2019 to be roughly flat, compared with its previous forecast of 7-12% growth. It also said it will cut more than 1.5 billion USD in costs by fiscal 2022, up from the 1 billion USD it announced last quarter. Walgreens reported adjusted earnings of 1.64 USD per share during the quarter, missing analysts’ estimates of 1.72 USD per share. The revenue also fell short, coming in at 34.53 billion USD. Analysts had been looking for 34.56 billion USD. It generated 1.16 billion USD in net income, or 1.24 USD per share, down from 1.35 billion USD.