By Syndication Washington Post, Bloomberg · Rita Nazareth, Claire Ballentine, Sarah Ponczek · BUSINESS
The S&P 500 trimmed its monthly gain as worse-than-estimated results from McDonald's Corp., 3M Co. and Harley-Davidson Inc. sent their shares slumping. Pfizer Inc. climbed after the drugmaker raised its earnings forecast and began a later-stage trial for a coronavirus vaccine with its German partner. Eastman Kodak Co. soared on news that it received a U.S. government loan.
Some of the largest companies report earnings this week, and investors will look for clues on whether a resurgence of covid-19 around the world will derail a recovery of corporate profits and the economy. The Federal Reserve extended most of its emergency lending programs by three months, through the remainder of 2020. A drop in consumer confidence added to evidence that the pace of the rebound is cooling as the virus interrupts reopenings in several states.
"We've seen a number of beneficiaries of the lockdowns and a lot of companies really hurt by the lockdowns," said Bill McMahon, chief investment officer of active strategies for Charles Schwab Investment Management. "There is still a lot of uncertainty about the rest of the year in how they guide."
The pandemic continues to rage in parts of the U.S., hot spots in Europe and across big emerging economies including India and Brazil. Governments are having to double down on the $11 trillion dollars worth of stimulus and unprecedented central bank support unleashed since the crisis began. The Fed is set to announce its rate decision Wednesday, and the market anticipates a dovish statement.
"There's enough stimulus and support in the market from a monetary policy perspective, but also from fiscal, and that keeps a nice floor under the market," said Amanda Agati, chief investment strategist for PNC Financial Services Group. "But we also think it's going to be very difficult to make a lot of forward progress in this environment."
Nasdaq's biggest companies may struggle to surpass a performance milestone from the height of the 1990s dot-com era, according to Julian Emanuel, head of equity and derivatives strategy at BTIG LLC.
The Nasdaq-100 was leading the S&P 500 for a 10th straight month as of Monday, according to data compiled by Bloomberg. If the tech-heavy gauge hangs onto the lead through Friday, it will match a record streak between May 1999 and February 2000 -- the final months before both indexes peaked. The latest run is at risk because of "poor share-price reactions to otherwise solid earnings reports" and other issues, he wrote.
These are some of the main moves in markets:
- The S&P 500 decreased 0.6% as of 4 p.m. EDT.
- The Stoxx Europe 600 Index added 0.4%.
- The MSCI Asia Pacific Index advanced 0.4%.
- The U.S. Dollar Index rose 0.1%.
- The euro declined 0.3% to $1.1716.
- The Japanese yen appreciated 0.3% to 105.08 per dollar.
- The yield on 10-year Treasurys declined four basis points to 0.58%.
- Germany's 10-year yield fell two basis points to -0.51%.
- Britain's 10-year yield was unchanged at 0.109%.
- The Bloomberg Commodity Index was little changed.
- West Texas Intermediate crude decreased 1.6% to $40.92 a barrel.
- Gold strengthened 0.9% to $1,959.72 an ounce.