Equities close lower as earnings weigh; Fed statement on tap

Audio By Carbonatix

Enlarge

By Chuck Mikolajczak

NEW YORK (Reuters) -U.S. stocks closed lower on Tuesday as the S&P 500 and Nasdaq retreated from record highs after some disappointing corporate earnings, while investors awaited a Federal Reserve policy statement.

A host of Dow components reported earnings, with UnitedHealth, Boeing and Merck all closing lower after their quarterly results.

Health insurer UnitedHealth stumbled 7.5% and was the biggest drag on the Dow after a disappointing profit forecast, while Boeing declined 4.4% despite reporting a smaller second-quarter loss.

Merck dipped 1.7% after the drugmaker reported quarterly results and said it was extending its pause on shipments of HPV vaccine Gardasil to China until at least the end of 2025 due to persistent weakness in demand.

“Earnings have been a bit of a mix. Economic data has been somewhat mixed too, but not enough to move the needle in terms of the Fed,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

“The next two days, you have Microsoft, Meta, Apple, Amazon – those are big companies, and they will move markets depending on how the earnings are and how the outlooks are.”

Earnings from megacaps Meta, Microsoft, Amazon and Apple are due this week and are likely to have a strong influence  on market direction due to their large market weightings.

The Dow Jones Industrial Average fell 204.57 points, or 0.46%, to 44,632.99, the S&P 500 lost 18.91 points, or 0.30%, to 6,370.86 and the Nasdaq Composite lost 80.29 points, or 0.38%, to 21,098.29. 

United Parcel Service shares plunged 10.6% as the package delivery company posted earnings and again declined to issue annual revenue and margin forecasts, deepening concerns that U.S. President Donald Trump’s continually changing trade policy is weighing on the company.

That helped drag down the Dow Jones Transport Average by 2.3% for its biggest daily percentage decline since May 21.

Likewise, Whirlpool plummeted 13.4% after the home appliances maker slashed its annual earnings forecast and dividend, citing pressure from a pull-forward in imports by rivals ahead of Trump’s tariffs.

Procter & Gamble shares shed 0.3%, as the maker of consumer goods such as dish soap and toilet paper forecast annual results below estimates and said it would raise prices on some products to offset the tariff impact.

Nearly 200 S&P 500 components have reported earnings and are posting results 6.4% above expectations, according to LSEG data, compared with an average of 6.3% over the last four quarters.

On the economic front, consumer confidence in July increased more than expected to 97.2. In June, U.S. job openings and hiring, or JOLTS data, had decreased, pointing to a further slowdown in labor market activity.

The JOLTS report was the first in a string of data on the labor market this week, culminating in Friday’s government payrolls report.

The Fed is largely expected to leave rates unchanged at its policy announcement on Wednesday. Remarks by Fed Chair Jerome Powell will be closely monitored to gauge the timing of any potential rate cuts.

Key negotiations between the U.S. and China completed their second day in Stockholm as the world’s two leading economies aim to resolve their trade conflict, with Trump saying he was told by Treasury Secretary Scott Bessent that the latter had a very good meeting with Chinese officials.

Declining issues outnumbered advancers by a 1.03-to-1 ratio on the NYSE and by a 2.08-to-1 ratio on the Nasdaq.

The S&P 500 posted 32 new 52-week highs and nine new lows, while the Nasdaq Composite recorded 76 new highs and 83 new lows.

Volume on U.S. exchanges was 18.01 billion shares, compared with the 17.89 billion average for the full session over the last 20 trading days.

(Reporting by Chuck Mikolajczak in New York; Additional reporting by Nikhil Sharma and Pranav Kashyap in Bengaluru; Editing by Matthew Lewis)