Stocks fell Tuesday, the first day of August, as investors navigated a flood of corporate earnings reports.
Pharmaceutical giant Merck reported a smaller-than-expected loss and revenue that exceeded expectations thanks to strong Keytruda sales. Merck shares rose 1%. Caterpillar also reported better-than-expected earnings and revenue, boosting shares 2%.
Pfizer, meanwhile, posted mixed results as Covid product sales plummeted. Uber also reported mixed numbers, but posted a surprise profit lifting shares about 1% before the bell.
More than 160 S&P 500 constituents are slated to report their latest quarterly results this week. More than half of the companies in the broad market index have already reported, with 82% posting earnings beats, according to FactSet. This further raises hopes that the economy will be able to avoid a recession as inflation begins to show signs of slowing.
But despite the performance so far, many on Wall Street came into the season with negative expectations, and expectation for an earnings decline from a year ago. Analysts are also bracing for a third consecutive quarter of falling profits.
“The second-quarter tech reporting season is about halfway through, and so far the outcome has been mixed,” said Mark Haefele, chief investment officer of UBS Global Wealth Management. “But against the backdrop of demanding valuations for the sector as a whole, we believe investors should brace for volatility ahead and be selective within the sector.”
Wall Street also await a fresh batch of critical economic indicators, including job openings and labor turnover numbers from June and the July manufacturing purchasing managers’ index will also be released Tuesday.
