Earnings Dominate

By Nicholas Jasinski |  Tuesday, July 28

Afternoon Swoon. Stocks dropped into the closing bell today, after spending most of the session just below the break-even line. No fewer than 21 S&P 500 components reported second-quarter results after today's close, with another 14 on deck to report before the market reopens tomorrow. And the dribs and drabs of intelligence about congressional wrangling over a trillion-dollar stimulus package continue to emerge.

Either or both could mean a volatile open for the market  tomorrow, and seemed to be motivation for traders to not hold stocks overnight. Hence the last-hour drop in stocks.

The S&P 500 closed down 0.6%, the Dow Jones Industrial Average fell 0.8%, and the Nasdaq Composite dropped 1.3%.

Contrary to yesterday's tech-led rally, today's action had a decidedly defensive tilt to it. Real estate and utilities were the best performing sectors in the S&P 500, while materials and energy were the laggards. Tech shares gave back some of their gains from yesterday. And safe-haven assets rose, with gold finishing up 0.7% at another record high—its fourth straight.

The morning's earnings reports got most of the attention today, with news on most of the macro forces driving the market largely incremental.

Coronavirus case growth in the U.S. has eased over the past week, as hot spots in a number of states appear to have turned a corner. Reimposed lockdown measures are having an effect, but cases are still rising in most of the country.

This morning's consumer confidence index for July from the Conference Board also reflected those actions. The index slipped to 92.6, from June’s upwardly revised 98.3. The consensus estimate had been for a 95.5 reading. It wasn’t a huge month-over-month drop, but nonetheless showed that rising coronavirus cases across the U.S. have had an impact on household sentiment.

High-profile results this morning came from McDonald's, 3M, Pfizer, Raytheon Technologies, Harley-Davidson, Altria Group, and more. After the bell, Starbucks, eBay, Advanced Micro Devices, and Amgen added their second-quarter reports.