Stocks pull back from record levels with Big Tech earnings on deck; Nasdaq drops 0.2%

Stocks declined Tuesday on the heels of another record-setting session, with investors looking ahead to the start of earnings results from mega-cap technology companies on Tuesday. Concerns over the spread of the Delta variant and a regulatory crackdown in China also lingered. 

The S&P 500 headed lower after the blue-chip index eked out a record closing and intraday high during the regular trading day on Monday. The Dow and Nasdaq also slipped. Chinese stocks listed in the U.S. sank further on Tuesday, with shares of companies like Alibaba (BABA) and Baidu (BIDU) each lower, amid speculation that a broad-based regulatory crackdown in China might spur U.S. restrictions against investments in Chinese companies.

On Tuesday, investors are set to receive quarterly earnings results from companies including Apple (AAPL), Alphabet (GOOGL) and Microsoft (MSFT), or some of the most heavily weighted stocks in the S&P 500. These will come on the heels of an already strong second-quarter earnings season, with the expected growth rate for aggregate S&P 500 earnings per share hovering at more than 74%, or the highest since 2009, according to FactSet. And in the past week, major tech names including Snap (SNAP), Twitter (TWTR) and Tesla (TSLA) have posted results that handily exceeded estimates, adding to optimism around the forthcoming reports. 

“These companies, for example Google, Microsoft, even Amazon, have cloud types of research and business coming in, which will bode well for the big push into big data and 5G,” Sylvia Jablonski, Defiance ETFs co-founder and chief investment officer, told Yahoo Finance. “I just think that these companies are so much more than they were even a year ago, and they’re poised to continue to grow.”

“In terms of, is this the peak? We have this weird scenario, where we’re still sort of comparing base case from year-over-year, which was in the heart of COVID,” she added. “It’s thought that this quarter will have growth of 8% to 9%. Next quarter will cool down to 8%. We’ll probably finish off the year at 7% to 7.5% GDP. I still personally like that number. I think that these tech names, the names that are reporting this week, have a good 10% left to go for the rest of the year. And they’ve really been slow movers up until now, so I think it’s still a good opportunity to be in these names.” 

Concerns over the path forward for growth have also continued to linger for investors, especially given the recent surge in the spread of the Delta variant. Goldman Sachs economists downgraded their forecast for third and fourth quarter growth on Monday, citing risks that a slower return of service sector activity would generate a sharper-than-expected growth deceleration. 

Other economists, however, have maintained a more upbeat outlook. 

“We’re not on the side of thinking that you’re seeing a very sharp growth slowdown. We think the consumer remains solid, we think services spending for the consumer remains solid,” Matthew Luzzetti, Deutsche Bank senior economist, told Yahoo Finance on Monday. 

“There are no doubt growth concerns out there, there are no doubt concerns about the Delta variant spilling over into economic activity over the coming months,” he added. “But at this point we’re viewing that as a downside risk. We really do have a baseline still of a very robust growth outlook, at least through the remainder of this year.”

4:03 p.m. ET: Stocks pull back from record levels with Big Tech earnings on deck; Nasdaq drops 0.2%

Here were the main moves in markets as of 4:03 p.m. ET:

  • S&P 500 (^GSPC): -20.76 (-0.47%) to 4,401.54

  • Dow (^DJI): -85.52 (-0.24%) to 35,058.79

  • Nasdaq (^IXIC): -180.14 (-1.21%) to 14,660.58

  • Crude (CL=F): -$0.18 (-0.25%) to $71.73 a barrel

  • Gold (GC=F): +$1.10 (+0.06%) to $1,800.30 per ounce

  • 10-year Treasury (^TNX): -4.2 bps to yield 1.2340%

2:51 p.m. ET: Stocks hold lower heading into tech earnings

The three major indexes struggled to claw back losses on Tuesday as investors await the second-quarter earnings results from the major tech titans. The Amazon- and Tesla-heavy consumer discretionary sector was the biggest laggard in the S&P 500, followed by information technology and communication services sectors. 

The Dow dropped more than 170 points, or 0.5%, with about an hour to go in the regular trading day. Intel, Salesforce and Apple were the biggest laggards in the S&P 500, while McDonald’s and Merck held slightly in the green.

10:27 a.m. ET: ‘There’s a bit of a balance that investors need to strike’ between cyclical and growth stocks: Strategist 

U.S. stocks have traded choppily over the past several weeks, alternating between shallow pullbacks and moves to new highs. Beneath the surface, leadership has also see-sawed between cyclical and growth stocks, or those poised to benefit from the reopening and those serving as a hedge against resurgent virus fears. 

According to at least one strategist, traders should consider investments on both ends of that spectrum as the market determines where to go from here. 

“For now, the markets are sort of in cruise control. They’re waiting for a catalyst to decide whether we should accelerate here, or whether we should take a sort of a pause here,” Jordan Jackson, global market strategist for JPMorgan Asset Management, told Yahoo Finance. “I think the markets are looking for China, potentially the Fed, to figure out what that catalyst might be. Right now we’re hearing more noise than any sort of signals in terms of the trajectory of the markets.” 

“There’s a bit of a balance that investors need to strike between putting their chips on the table with that reflation trade, which we still think has some legs to run, but also balancing that out with the growthier side of the market as well,” he added. 

10:12 a.m. ET: Consumer confidence rises to highest level since February 2020 in July

Consumer confidence unexpectedly increased in July to reach the highest level since the start of the pandemic in the U.S. 

The Conference Board’s July consumer confidence index came in at 129.1 for the month, topping consensus estimates for 123.9, according to Bloomberg data. June’s consumer confidence index was also revised up to 128.9, from the 127.3 previously reported.

“Consumers’ appraisal of present-day conditions held steady, suggesting economic growth in Q3 is off to a strong start,” Lynn Franco, senior director of economic indicators at The Conference Board, said in a press statement. “Consumers’ optimism about the short-term outlook didn’t waver, and they continued to expect that business conditions, jobs, and personal financial prospects will improve.”

“Short-term inflation expectations eased slightly but remained elevated. Spending intentions picked up in July, with a larger percentage of consumers saying they planned to purchase homes, automobiles, and major appliances in the coming months,” Franco added. “Thus, consumer spending should continue to support robust economic growth in the second half of 2021.”

9:30 a.m. ET: Stocks open lower 

Here’s where markets were trading shortly after the opening bell: 

  • S&P 500 (^GSPC): -11.74 (-0.27%) to 4,410.56

  • Dow (^DJI): -166.56 (-0.47%) to 34,977.75

  • Nasdaq (^IXIC): -30.52 (-0.25%) to 14,803.60

  • Crude (CL=F): -$0.03 (-0.04%) to $71.88 a barrel

  • Gold (GC=F): +$5.10 (+0.28%) to $1,804.30 per ounce

  • 10-year Treasury (^TNX): -3.5 bps to yield 1.241

9:02 a.m. ET: Home prices surged by the most on record in May: Case-Shiller

A closely watched index tracking U.S. home price changes rocketed by the fastest pace on record in May, as tight inventory levels and high demand pushed up prices further.

The S&P CoreLogic Case-Shiller National Home Price index rose at a 16.61% year-over-year rate in May to accelerate from April’s 14.84% rise. This marked the fastest increase ever reported in data spanning back to 1988.

The institution’s 20-city composite index, tracking home price changes in 20 of the largest U.S. metropolitan areas, rose 16.99% over last year, which came in higher than the 16.33% consensus economists were expecting, according to Bloomberg data.

8:32 a.m. ET: Durable goods orders posted back-to-back monthly gain in June 

Durable goods orders, or orders for manufactured products intended to last at least three years, rose for a second straight month in June, with the manufacturing sector holding up despite rising concerns over the Delta variant. 

Durable goods orders increased 0.8% in June compared to May, according to the Commerce Department’s preliminary monthly report. This was below the 2.2% rise expected, however, according to Bloomberg data. However, May’s increase was upwardly revised to 3.2%, from the 2.3% previously reported.

Transportation orders comprised the bulk of June’s gain, and non-defense aircraft and parts orders were up 17.0% during the month. Excluding transportation, durable goods orders were up 0.3%, or also below the 0.8% consensus expectation. 

Non-defense capital goods orders, excluding aircraft, rose 0.5% during the month, matching May’s upwardly revised rate. This metric is used as a proxy for business capital expenditures. 

7:21 a.m. ET Tuesday: Stock futures mostly lower before Big Tech earnings

Here were the main moves in markets as of Tuesday morning: 

  • S&P 500 futures (ES=F): -4.5 points (-0.1%) to 4,409.75

  • Dow futures (YM=F): -64 points (-0.18%) to 34,970.00

  • Nasdaq futures (NQ=F): +8.5 points (+0.06%) to 15,126.25

  • Crude (CL=F): +$0.08 (+0.11%) to $71.99 a barrel

  • Gold (GC=F): -$3.30 (-0.18%) to $1,795.90 per ounce

  • 10-year Treasury (^TNX): -1.5 bps, yielding 1.261%

6:10 p.m. ET Monday: Stock futures drift sideways

Here were the main moves in markets as the overnight session kicked off on Monday: 

  • S&P 500 futures (ES=F): flat at 4,414.25

  • Dow futures (YM=F): -11 points (-0.03%) to 35,023.00

  • Nasdaq futures (NQ=F): flat at 15,117.75

  • Crude (CL=F): +$0.24 (+0.33%) to $72.15 a barrel

  • Gold (GC=F): -$1.80 (-0.1%) to $1,797.40 per ounce

  • 10-year Treasury (^TNX): unchanged, yielding 1.295%

FILE – In this June 16, 2021, The “Fearless Girl” statue faces the New York Stock Exchange. Stocks are opening higher on Wall Street Friday, July 23, keeping the market on track for a weekly gain following a big drop at the beginning of the week. (AP Photo/Richard Drew, File)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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