By Johann M Cherian and Bansari Mayur Kamdar
(Reuters) – The S&P 500 and Nasdaq fell on Tuesday as investors assessed mixed earnings from pharma heavyweights and digested data that showed manufacturing activity slowed more than expected in July.
Pfizer gained 1.3% after the drugmaker said it would launch a program to cut costs if demand for its COVID-19 products remains muted this fall.
Merck shares were flat even as it raised its full-year profit forecast after posting a smaller-than-expected second-quarter loss.
Keeping the Dow afloat, Caterpillar advanced 6.7% as the global economic bellwether reported a rise in second-quarter profit, though it warned of a sequential fall in current-quarter sales and margins.
Uber shed 4.6% after the ride-hailing company missed second-quarter revenue expectations.
U.S. second-quarter earnings are now expected to fall 6.4% from a year earlier, compared with a 7.9% decline estimated a week ago, as per Refinitiv data.
“So far things have played out well and we’re looking forward to continued strengths and the outlook seems to be firming,” said Peter Andersen, founder of Andersen Capital Management.
On the economic data front, U.S. manufacturing appeared to have stabilized at weaker levels in July amid a gradual improvement in new orders, while a survey showed factory employment dropped to a three-year low, suggesting that layoffs were accelerating.
Hurting shares of megacap growth firms such as Tesla and Microsoft, whose valuations come under pressure when borrowing costs rise, yield on the benchmark 10-year treasury note climbed over 4%. [US/]
U.S. equities ended July on a strong footing, riding on the back of better-than-expected earnings, and hopes of a soft landing for the economy that has stayed strong in the face of tighter credit conditions while inflation has cooled.
The benchmark S&P 500 hit a more than 15-month high on Monday, and is about 4.6% away from breaching its record high closing level, notched on Jan. 3, 2022.
At 10:17 a.m. ET, the Dow Jones Industrial Average was up 35.72 points, or 0.10%, at 35,595.25, the S&P 500 was down 17.37 points, or 0.38%, at 4,571.59, and the Nasdaq Composite was down 114.54 points, or 0.80%, at 14,231.49.
Nine of the 11 major S&P 500 sectors declined, with mining stocks easing 0.3%, tracking weak metals prices after a survey showed July factory activity swung to contraction in top-consumer China. [MET/L]
Norwegian Cruise Line sank 14.0% after it forecast third-quarter profit below estimates on higher costs.
JetBlue Airways tumbled 7.6% after lowering its annual profit forecast, citing a hit from the termination of its revenue-sharing deal with American Airlines.
Arista Networks jumped 15.4% as the network gear maker forecast quarterly revenue above estimates after delivering better-than-expected results.
Global long/short hedge funds, which bet whether the stocks will fall or rise, were forced to unwind bearish positions that were dragging down performance in July, a Goldman Sachs report showed on Monday.
Declining issues outnumbered advancers by a 2.78-to-1 ratio on the NYSE and a 2.42-to-1 ratio on the Nasdaq.
The S&P index recorded 20 new 52-week highs and two new lows, while the Nasdaq recorded 48 new highs and 35 new lows.
(Reporting by Johann M Cherian and Bansari Mayur Kamdar in Bengaluru; Editing by Vinay Dwivedi)
