US Stocks Slide as Focus Shifts to Earnings

The major U.S. stock indexes finished mixed on Monday after posting solid gains last week, as investors prepared for the kick-off of what is widely expected to be a disappointing quarterly earnings season due to the impact of the coronavirus pandemic on the global economy. Stocks posted their first decline in three sessions.

Monday’s declines came after the benchmark S&P 500 Index and the blue chip Dow Jones Industrial Average posted historic gains in the prior week. The S&P 500 was coming off its biggest one-week gain since 1974 while the Dow notched its seventh-largest weekly gain.

The S&P 500 has recovered about 24% since hitting a three-year low in March, powered by aggressive U.S. monetary and fiscal stimulus and early signs of a potential peaking in U.S. coronavirus cases, but remains about 19% below its mid-February record high.

The S&P 500 Index settled at 2761.63, down 28.19 or -1.07%. The blue chip Dow Jones Industrial Average finished at 23390.77, down 328.60 or -1.47% and the technology-driven NASDAQ Composite closed at 8192.43, up 38.85 or +0.50%.

Traders Prepare for Bank Earnings

The markets never gained traction on Monday as investors turned their attention to the start of the corporate earnings season, with JPMorgan Chase, Johnson & Johnson and Wells Fargo among the companies set to report. Meanwhile, several companies have removed their earnings guidance, citing the coronavirus outbreak, while others have slashed their profits. Ahead of Tuesday’s reports, the S&P banking subsector shed 4%.

Stocks Making Headlines for the Wrong Reasons

Caterpillar shares dropped 8.71%, leading the Dow lower, after the construction giant was downgraded by an analyst at Bank of America. The analyst lower his Caterpillar rating to underperform from neutral, noting:  “Energy and mining stocks are signaling another severe capital spending downturn in two of CAT’s most important end markets.”

Ford Motor Co. shed 5.1% after the carmaker projected quarterly adjusted loss before interest and taxes to be about $600 million, compared with a profit of $2.4 billion a year earlier.

Carnival Corp., Royal Caribbean Cruises and Norwegian Cruise Line Holdings tumbled as the U.S. Centers for Disease Control and Prevention extended its “no sail order” for all cruise ships.

‘Stay-at-Home’ Stocks Amazon and Netflix Surge

Helping to limit losses, Amazon.com Inc. gained 5.3% as the retail giant said it would hire 75,000 more people amid a surge in demand for online orders. Amazon finished less than 5% from its 52-week high in early afternoon trading.

Shares of Netflix surged 7% to reach a 52-week high of $400.51 per share Monday, before closing at $396.72 per share. Investment bank William Blair said in late March that Netflix may see an increase in subscribers because people are stuck at home spending more time watching video services.