Dow Falls 300 Points, Nasdaq Slumps as Virus Spike Overshadows Earnings

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Stocks fell Tuesday as Wall Street looked to earnings for indications on the strength of the post-pandemic recovery but a spike in virus cases overshadowed mostly solid corporate results.

The Dow Jones Industrial Average declined 306 points, or 0.9%, to 33,770, the S&P 500 fell 0.95% and the Nasdaq was down 1.39%.

Travel-related stocks such as United Airlines  (UAL) – Get Report tumbled Tuesday. The airline reported a first-quarter loss of $1.4 billion.

“Stocks are dropping again (Tuesday) with no clear catalysts,” said Callie Cox, senior investment strategist for Ally Invest. “Markets are a little stretched at this point, so we may see stocks take a small step back here and there. That’s normal, and we’d expect any dip to be bought quickly.”

Stocks declined Monday and the Dow and S&P 500 came off record highs as investors turned their attention to a busy week for earnings. 

Eighty-one of the 500 members in the S&P 500 index are expected to report earnings this week. According to FactSet, Wall Street expects an increase in earnings of more than 24% for companies in the broad market index.

But the latest virus wave in Asia and South America, particularly in India and Brazil, has pressured both global growth forecasts and has sapped investor optimism despite an accelerating vaccine rollout in the United States and improving distributions in Europe. It also was in sharp contrast to the enthusiasm over what so far has been a stronger-than-expected first-quarter earnings season.

Johnson & Johnson  (JNJ) – Get Report posted stronger-than-expected first-quarter earnings and boosted its full-year earnings forecast as sales from medical devices and pharmaceuticals recorded solid post-pandemic gains.

Procter & Gamble’s  (PG) – Get Report fiscal third-quarter earnings topped estimates and the company maintained its full-year forecast for organic revenue growth as stay-at-home sales related to the coronavirus pandemic boosted its top and bottom lines

International Business Machines  (IBM) – Get Report was rising 3.67% Tuesday after the computer giant reported better-than-expected first-quarter earnings and revenue and reiterated that it expects an increase in 2021 revenue.

Revenue of $17.7 billion rose 1% from a year earlier and topped analysts’ forecasts of $17.3 billion. Total cloud revenue in the quarter jumped 21% to $6.5 billion, while sales at IBM’s cloud and cognitive software unit rose nearly 4% to $5.4 billion.

Netflix  (NFLX) – Get Report is scheduled to report earnings after the closing bell Tuesday.

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