U.S. stocks closed lower Tuesday as investors digested a torrent of corporate earnings reports and a new bill to make it easier for social media users to migrate away from industry heavyweights Facebook, Snap and Twitter to rival platforms.
The four members of the Dow Jones Industrial Average that reported third-quarter earnings on Tuesday resulted in a net negative for the stock market, as disappointing numbers from /zigman2/quotes/203508018/composite MCD +0.95% orp. and Travelers /zigman2/quotes/206313935/composite TRV +0.27% outweighed beats from United Technologies and Procter & Gamble /zigman2/quotes/202894679/composite PG +0.51% .
Investors also watched fresh Brexit developments after the U.K. parliament voted Tuesday to consider Prime Minister Boris Johnson’s plan for leaving the European Union, but rejected his rapid timetable for the proposed split.
How did major indexes perform?
The S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.60% fell 10.73 points, or 0.36%, to 2,995.99. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP +2.26% shed 58.69 points, or 0.72%, to 8,104.30. The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.34% lost 39.54 points, or 0.15%, to 26,788.10, on the back of worse-than-expected third-quarter results from McDonald’s and Traveler Cos.
On Monday, the Dow ended the day 57.44 points, or 0.2%, higher at 26,827.64, weighed by a decline in shares of Boeing Co .’s stock /zigman2/quotes/208579720/composite BA +6.83% , following a report on Friday that said the company may have misled federal aviation authorities about the safety of the 737 Max jet.
The S&P 500 index rose 20.52 points, or 0.7%, to end at 3,006.72, leaving it 0.6% away from its record closing high of 3,025.86 set on July 26. The Nasdaq Composite Index climbed 73.44 points, or 0.9%, to finish at 8,162.99, about 2% from its July peak.
What drove the market?
Investors were keeping a close eye on Tuesday’s deluge of corporate results, including about 20 percent of the S&P 500 index components this week and four Dow components that reported early Tuesday.
“Earnings have been mixed, but I still believe they’re going to surprise to the upside,” said Ken Engelke, chief economic strategist at Capitol Securities Management, in an interview.
Engelke sees promise in value stocks, but more ominous tones for growth and technology sectors, where social media companies, in particular, could suffer from “regulatory overreach.”
S&P 500 index companies for the third quarter are likely to report a year-over-year decline in earnings of 4.7%, but year-over-year growth in revenues of 2.6%, with a possible net profit margin of 11.3%, which would be the first time index companies have reported three straight quarters of year-over-year declines in net profit margin since Q1 2009 through Q3 2009, FactSet analyst John Butters said.
But through Tuesday morning 19% of S&P 500 index companies have reported quarterly numbers and 80% have beaten earnings estimates.
In economic data, investors received an update on the health of the U.S. housing market with existing-home sales for September falling by 2.2% to an annualized pace of 5.38 million.
On the international trade front, President Donald Trump said Monday that talks between Washington and Beijing are going “very well.” Top trade negotiator Robert Lighthizer also said that the U.S. aims to finish the first phase of talks by mid-November when the two countries meet in Chile.