4:17pm: Some 80% of S&P components have topped Street expectations thus far
The Dow closed Tuesday down 159 points, 0.5%, at 35,314, the Nasdaq Composite declined 110 points, 0.8%, to 13,884 and the S&P 500 slid 19 points, 04%, to 4,499. The small-cap Russell 2000 index fell 12 points, 0.6%, to 1,946.
The benchmarks started the day poorly after Moody’s downgraded the credit rating on several regional banks but managed to recover slightly as the session went on. At its lowest point, the Dow was down about 450 points.
Earnings season is in full force again this week. Thus far, 89% of S&P 500 stocks have reported quarterly results, and roughly eight in ten of them have beaten Street expectations, according to FactSet.
After the bell Tuesday, investors are watching for Wynn Resorts (NASDAQ:WYNN), Take-Two Interactive and Rivian, among others.
12:05pm: Stocks fall as Moody’s downgrades several regional banks
US stocks were lower in noon trading as Moody’s downgraded the credit rating on several regional banks, citing deposit risk, a potential recession and struggling commercial real estate portfolios.
At midday, the Dow fell 341 points to 35,132 while the S&P 500 eased 49 points at 4,470 and the tech-heavy Nasdaq lost 204 points to 13,790.
“Any sort of reduction of faith in the regional banking system is really terrible for market sentiment,” Infrastructure Capital Advisors CEO Jay Hatfield said.
Notable movers included shares of Datadog Inc (NASDAQ:DDOG), which sank 19% after the software company issued weaker-than-expected 3Q and full-year revenue guidance.
9:40am: Dow falls as banks weigh after Moody's downgrade
US markets headed south at the open with banks rattled by news Moody's has downgraded a number of small to medium sized lenders.
Shortly after the opening bell, the Dow Jones Industrial Average was down 227.29 points, 0.6%, at 35,245.84, the S&P 500 slipped 29.74 points, or 0.7%, at 4,488.70 and the Nasdaq Composite was 111.11 points lower, 0.8%, at 13,883.28.
Banks weakened following the Moody's downgrades with State Street Corp down 3.3% and US Bancorp losing 3.9% while blue-chips were not immune with Bank of America losing 3.1% and Wells Fargo shedding 3.0%,
Eli Lilly jumped 13.2% as it raised guidance when reporting that second quarter net income nearly doubled to $1.76 billion from $952.5 million the year before on revenue of $8.31 billion, up from $6.49 billion. Adjusted EPS of $2.11 beat Street expectations of $1.98.
The firm said sales of its new diabetes and weight-loss drug Mounjaro had soared to $979.8 million.
The company now expects full-year revenue of between $33.4 billion to $33.9 billion, up from a previous forecast of $31.2 billion to $31.7 billion. Adjusted EPS guidance is now a range of $9.70 to $9.90 per share for the year, up from a range of $8.65 to $8.85.
Shares of AMC Entertainment Holdings Inc rode a "Barbenheimer bounce" after the theater operator reported its best financial performance since 2019.
Blockbusters such as Barbie and Oppenheimer along with the latest instalment of Mission Impossible, have packed in aisles in American theaters.
Second-quarter results from AMC exceeded expectations, driven by a 12% attendance increase and enhanced per-guest spending, sending shares 2.2% to the good.
But UPS fell 2.1% as it lowered guidance for the year “to reflect the volume impact from labour negotiations and the costs associated with the tentative agreement”.
The firm reached a pay deal last month with Teamsters, which represents 300,000 of its employees, after lengthy negotiations.
UPS now expects revenue to be around $93 billion this year, down from previous guidance of $97 billion, while the adjusted operating margin will be 11.8%, down from earlier guidance of 12.8%.
In economic news, the US goods and services deficit was $65.5 billion in June, down $2.8 billion from the $68.3 billion recorded in May.
Imports fell by 1%, to $313 billion, including a $2.3 billion decrease in shipments of heavy-duty capital goods into the US. Exports were 0.1% down at $247.5 billion, partly due to a £500 million drop in the value of crude oil shipments.
7:50am: Banks hit by Moody's downgrades, Eli Lilly ups guidance
US stocks are expected to open lower with banks under pressure after Moody’s downgraded ratings for a number of small to mid-sized lenders and as weak trade data in China saw commodity prices fall.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.7% lower, while those for the S&P 500 fell 0.8%, and contracts for the Nasdaq 100 futures were down 0.9%.
Joshua Mahony at Scope Markets said: “Equity markets look set for a somewhat downbeat day, with Asian declines feeding through to Europe and the US. Overnight data out of China brought selling pressure for energy markets and antipodean currencies, with exports posting the biggest decline since February 2020.”
Banks are a weak feature in pre-market trading after Moody's cut credit ratings of several small to mid-sized US banks on Monday and said it may downgrade some of the nation's biggest lenders, warning that the sector's credit strength will likely be tested by funding risks and weaker profitability.
Moody's cut the ratings of 10 banks by one notch and placed six banking giants, including Bank of New York Mellon, US Bancorp, State Street and Truist Financial on review for potential downgrades.
Ahead of the opening bell, US Bancorp was called down 2.8% and State Street 2.0%, while blue-chips Bank of America and Wells Fargo were 1.8% and 1.3% lower respectively.
Another stock on the move is Eli Lilly which jumped 8.8% as it raised guidance when reporting that second quarter net income nearly doubled to $1.76 billion from $952.5 million the year before on revenue of $8.31 billion, up from $6.49 billion.
The firm said sales of its new diabetes and weight-loss drug Mounjaro had soared to $979.8 million.
Adjusted EPS of $2.11 beat Street expectations of $1.98.
The company now expects full-year revenue of between $33.4 billion to $33.9 billion, up from a previous forecast of $31.2 billion to $31.7 billion.
Adjusted EPS guidance is now a range of $9.70 to $9.90 per share for the year, up from a range of $8.65 to $8.85.
But UPS is heading south, with shares down around 4.9% after it lowered guidance for the year “to reflect the volume impact from labour negotiations and the costs associated with the tentative agreement”.
The firm reached a pay deal last month with Teamsters, which represents 300,000 of its employees, after lengthy negotiations.
UPS now expects revenue to be around $93 billion this year, down from previous guidance of $97 billion, while the adjusted operating margin will be 11.8%, down from earlier guidance of 12.8%.