US close: Stocks slide following corporate earnings
By Iain Gilbert
Date: Tuesday 28 Jul 2020
(Sharecast News) - Wall Street stocks closed lower on Tuesday amid stimulus headlines and another slab of corporate earnings.
At the close, the Dow Jones Industrial Average was down 0.77% at 26,379.28, while the S&P 500 was 0.65% softer at 3,218.44 and the Nasdaq Composite saw out the session 1.27% weaker at 10,402.09.
The Dow closed 205.49 points lower on Tuesday, reversing gains recorded in the previous session as market participants prepared for a week full of major corporate earnings.
The Republican Party's coronavirus relief plan was in focus at the open on Tuesday after Senate Majority Leader Mitch McConnell unveiled the bill overnight.
The new legislation will offer relief for unemployed Americans and include another direct payment to individuals of as much as $1,200, as well as more Paycheck Protection Program, small business loan funds and other provisions.
McConnell said the bill would set federal unemployment insurance at 70% of a worker's previous wages, replacing the $600 per week which was set to stop being paid this week.
Also in focus, the Federal Reserve will start its two-day policy meeting, followed by the announcement of its interest rate decision on Wednesday.
The FOMC maintained its target range for the federal funds rate at 0-0.25% at its last meeting in June as the Covid-19 pandemic continued to wreak havoc on the US economy.
Some economists believed that rate-setters might strengthen their so-called 'forward guidance'.
In corporate news, 3M posted quarterly profit figures that fell short of estimates on the Street ahead of the bell, while McDonald's shares slid after the fast-food giant posted a quarterly profit that fell short of analyst expectations.
Pfizer posted better-than-expected second-quarter earnings and raised its full-year guidance, while Raytheon topped estimates for both profits and sales on the back of a strong showing by its defence unit.
On the macro front, home prices continued to increase in May, albeit at a moderately decelerated pace than a month earlier, according to the S&P CoreLogic Case-Shiller National Home Price Index. Nationally, prices rose 4.5% annually in May, a slight drop from the 4.6% gain recorded in April. Home values increased in all 19 of the cities surveyed, however, gains accelerated in just three.
Elsewhere, US consumer confidence slipped in July, according to the Conference Board, amid increased Covid-19 cases across the nation. Consumer confidence dropped to a reading of 92.6 in July from an upwardly revised print of 98.3 in June - weaker than the 94.5 expected by analysts.
Lastly, manufacturing in the Fifth District showed signs of recovery in July, according to the Richmond Federal Reserve. The composite index rose from 0 in June to 10 in July - its first positive reading since March.
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