Wall Street stumbles as stimulus talks loom; 3M, McDonald's disappoint

By Devik Jain and Medha Singh (Reuters) - U.S. stocks fell on Tuesday as investors awaited progress on Washington's coronavirus aid plan, with the blue-chip Dow index weighed down by 3M and McDonald's shares after the companies posted quarterly profits that missed estimates. Industrial conglomerate 3M Co dropped 4.3% as it reported a plunge in demand across its business units in the second quarter

Reuters July 29, 2020 00:10:20 IST
Wall Street stumbles as stimulus talks loom; 3M, McDonald's disappoint

Wall Street stumbles as stimulus talks loom 3M McDonalds disappoint

By Devik Jain and Medha Singh

(Reuters) - U.S. stocks fell on Tuesday as investors awaited progress on Washington's coronavirus aid plan, with the blue-chip Dow index weighed down by 3M and McDonald's shares after the companies posted quarterly profits that missed estimates.

Industrial conglomerate 3M Co dropped 4.3% as it reported a plunge in demand across its business units in the second quarter.

McDonald's Corp fell 2.5% after posting a bigger-than-expected drop in global same-store sales.

"This earnings season is a classic example of management sandbagging their second-quarter expectations and the analysts community playing along," said Mike Zigmont, head of trading and research at Harvest Volatility Management in New York.

"It's mostly about beating expectations and if companies don't beat that's the story because it's so rare."

Of the 130 S&P 500 companies that have reported, about 80% of them surpassed significantly lowered forecasts for quarterly profit, according to Refinitiv IBES data, better than the average of 71% companies beating profit estimates over the past four quarters.

A rally in U.S. stocks slowed recently as investors worried about signs of a stalling economic recovery amid a resurgence in coronavirus cases, while awaiting progress on government stimulus talks.

Senate Republicans announced on Monday a $1 trillion aid package hammered out with the White House — four days before millions of Americans lose unemployment benefits — but the proposal sparked immediate opposition from both Democrats and some Republicans.

Latest data showed U.S. consumer confidence ebbed in July amid a flare-up in coronavirus infections across the country.

The U.S. Federal Reserve also said it would extend several of its lending facilities through the end of the year, in a sign the economic impact of the pandemic has been more prolonged than expected.

"The coronavirus has sort of popped back into the consciousness of America and that will dampen enthusiasm a little bit. A small disappointment makes sense because you can't have exuberant confidence forever," Zigmont said.

At 12:44 p.m. ET, the Dow Jones Industrial Average <.DJI> was down 124.30 points, or 0.47%, at 26,460.47 and the S&P 500 <.SPX> was down 4.65 points, or 0.14%, at 3,234.76. The Nasdaq Composite <.IXIC> was down 38.04 points, or 0.36%, at 10,498.22.

A major focus this week will be results from Wall Street's trillion-dollar market value companies - Apple Inc , Amazon.com Inc and Alphabet Inc - as well as Facebook Inc .

Industrials <.SPLRCI> and consumer discretionary <.SPLRCD> stocks weighed the most on the benchmark S&P 500 index.

The U.S. central bank is expected to reiterate its accommodative stance when it wraps up its two-day policy meeting on Wednesday afternoon.

Pfizer Inc rose 4% after it raised its full-year forecast on strong demand for cancer drugs and blood thinners. Late on Monday, the drugmaker announced a pivotal global study to evaluate a COVID-19 vaccine candidate.

Declining issues outnumbered advancers for a 1.07-to-1 ratio on the NYSE and for a 1.45-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and no new low, while the Nasdaq recorded 47 new highs and 17 new lows.

(Reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Shounak Dasgupta and Maju Samuel)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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