By Chuck Mikolajczak
NEW YORK (Reuters) – A gauge of global stocks rose on Tuesday to reach its highest level since early February as U.S. earnings season picks up steam, while Treasury yields dipped after three straight sessions of gains.
On Wall Street, the S&P 500 was roughly unchanged, but the Dow Industrials were weighed down by a 1.95% drop in Goldman Sachs after its quarterly results as well as a 2.31% decline in fellow Dow component Johnson & Johnson despite boosting its profit forecast.
(Graphic: Goldman Sachs earnings, https://www.reuters.com/graphics/EARNINGS-AUTOMATED/GS-N/zjvqjazeapx/chart_eikon.jpg)
Goldman peer Bank of America also lost ground even after its earnings beat estimates and was last off 1.17%.
“We are back to being driven by the realities that companies face and then how well they are doing facing those realities, and this is why we call earnings season ‘winners and losers’ season,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“Now you actually have to think about what is in your portfolio and take action accordingly because it is kind of a crazy mix.”
The Dow Jones Industrial Average fell 141.41 points, or 0.42%, to 33,845.77; the S&P 500 lost 6 points, or 0.14%, to 4,145.32; and the Nasdaq Composite dropped 13.93 points, or 0.11%, to 12,143.80.
European shares advanced, in part due to solid economic data from China, but were off earlier levels that sent it to its highest since Feb. 16, 2022.
The pan-European STOXX 600 index rose 0.33% and MSCI’s gauge of stocks across the globe gained 0.10%. MSCI’s index had earlier reached its highest level since Feb. 3.
Investors have turned their focus to corporate earnings as the market has largely priced in a 25 basis points rate hike from the Federal Reserve at its May meeting, according to CME’s FedWatch Tool.
St. Louis Federal Reserve President James Bullard said on Tuesday in an interview with Reuters that the Fed should continue hiking interest rates as recent data has shown persistent inflation in an economy that is likely to continue to grow.
U.S. Treasury yields dipped, with the benchmark 10-year falling for the first time after three straight sessions of gains, as investors weighed whether the Fed would pause its rate hike cycle after the May meeting.
The yield on 10-year Treasury notes was down 3.5 basis points to 3.557% while the two-year U.S. Treasury yield, which typically moves in step with rate expectations, was down 2.1 basis points at 4.167%.
The dollar was weaker against most major currencies after the data from China, while the pound strengthened against he greenback thanks to pay growth data in Britain boosting expectations the Bank of England will raise rates in May.
The dollar index fell 0.353%, with the euro up 0.35% to $1.0964.
The Japanese yen strengthened 0.43% versus the greenback at 133.90 per dollar, while Sterling was last trading at $1.2427, up 0.43% on the day.
Oil prices were little changed, as investors weighed the upbeat China data with concerns that rising rates could dent the growth outlook and sap demand.
U.S. crude recently fell 0.07% to $80.77 per barrel and Brent was at $84.63, down 0.15% on the day.
(Reporting by Chuck Mikolajczak)
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