U.S. stocks closed lower Wednesday, a day after the S&P 500 and Nasdaq carved out their first records in months, following earnings from high-profile companies, including Dow components Boeing Co. and Caterpillar Inc., that offered a mixed picture of American corporations.
How did benchmarks fare?
The Dow Jones Industrial Average (DOW:DJIA) fell 59.34 points, or 0.2%, to 26,597.05, while the S&P 500 index (S&P:SPX) shed 6.43 points, or 0.2%, to 2,927.25. The Nasdaq Composite Index (AMERICAN:COMP) dropped 18.81 points, or 0.2%, to 8,102.01. During the session, the tech-heavy index set a new intraday high of 8,139.55.
On Tuesday, the S&P 500 index and the Nasdaq Composite Index closed at new highs while the Dow rose to stand less than 1% away from its record.
What drove the market?
Corporate quarterly results remain in focus for Wall Street midweek. More than a fifth of the S&P 500 constituents have reported results, with nearly 80% of those companies producing earnings results that topped analysts’ consensus estimates, compared with about 65% in the fourth quarter, according to data from Refinitiv.
To be sure, that reflects lowered estimates heading into the quarter amid worries about a recession and anemic growth outside of the U.S., amplified by a trade spat between Washington and Beijing.
Setting the tone Wednesday were earnings from heavyweight Dow components Boeing (NYS:BA) and Caterpillar (NYS:CAT) , with Boeing shares edging higher despite the aerospace firm announcing core earnings per share that fell short of Wall Street expectations, while suspending guidance for 2019 due to uncertainty surrounding its 737 Max aircraft and pausing its share-repurchase program.
Meanwhile, Caterpillar reported first-quarter earnings that topped estimates thanks to a tax benefit and higher-than-expected sales. Shares still fell 3%.
Against the backdrop of earnings, the record climb for markets Tuesday failed to provide a significant catalyst for Asian markets, which market participants viewed as a signal that some caution about the ascent remains.
Media reports indicated that China may dial back on a cocktail of economic stimulus after better-than-expected growth, with that coming as negotiations on trade are expected to restart April 30 in Beijing .
What were analysts saying?
“Earnings are driving stocks this week, and while we’re seeing better-than-expected earnings overall, it’s clear that expectations were lower than they should have been,” said Kate Warne, investment strategist at Edward Jones.
“Expectations were set back in January and February when the economic outlook was worse than today, and I don’t think they were adjusted up as they should have been as we saw overall signs of economic improvement,” she said.
“Apparently, we are stuck in a stock market rally that no one likes, as you would be troubled to find another record-breaking U.S. session that was received which such low-spirited appeal from Asian investors,” Stephen Innes, head of trading at SPI Asset Management, wrote in a daily research note.
What stocks were in focus?
Shares of Occidental Petroleum Corp . (NYS:OXY) fell 0.6% after the firm announced a $76-per-share takeover bid for Anadarko Petroleum Corp . , in a half-cash, half-stock deal. Anadarko shares surged 12%.
The offer comes after Chevron Corp . (NYS:CVX) had announced an agreement to buy Anadarko that would value the company at $65 per share.
AT&T Inc . (NYS:T) stock slid 4.1% after the media and telecommunications giant fell short of first-quarter revenue expectations.
Shares of Northrop Grumman Corp . (NYS:NOC) dropped 4.3% after the defense and aerospace firm topped profit estimates for the first quarter, but fell short on revenue targets.
Boston Scientific Corp . (NYS:BSX) shares declined 1.3% after the pharmaceutical company reported that it missed first-quarter profit and revenue expectations.
How did other markets perform?
The Shanghai Composite (SHG:CN:SHCOMP) gained 0.1% and the CSI 300 Index (CHINA:XX:000300) rose 0.3%, while major European stock markets, as measured by the Stoxx Europe 600 index, (STOXX:XX:SXXP) fell.
—Mark DeCambre contributed to this article