Dusseldorf Sobering US economic data put a temporary end to the Wall Street rally. Encouraging company balance sheets prevented even bigger price losses on Tuesday. The US standard value index Dow Jones closed 0.1 percent lower at 24,101 points. The technology-heavy Nasdaq dropped 1.4 percent to 8607 points. The broad S&P 500 lost 0.5 percent to 2863 points.
In the past five weeks, the Dow had made up for more than half of the losses from the global stock market crash due to the corona virus. According to observers, a great deal of optimism has been priced in again in view of the still great uncertainties surrounding the economic consequences of the Corona crisis.
The Consumer Confidence Index for April fell to 86.9 points from 120 points in the previous month, according to the Conference Board research institute. The barometer for the assessment of the current situation even fell by more than half to 76.4 points. That is the biggest decline since the beginning of the surveys. Private consumption is the mainstay of the world’s largest economy.
“We are in a bind,” said analyst Adam Vettese from online broker eToro. “The longer the lockdown lasts, the greater the economic damage threatens.” If, on the other hand, the coronavirus restrictions were loosened too early, this could lead to a second wave of infections, the restrictions being tightened again, and even worse economic data.
“Investor confidence is increasing as we head for the highlight of the quarterly season,” wrote broker Oanda analyst Craig Erlam. The rest of the week could prove to be a “banana peel” on which investors threatened to slip. The major US technology stocks in particular had recently received great advances from investors – but could now disappoint with their numbers and stall the recovery on the stock markets.
Look at the individual values
3M was one of the favorites on the US stock market with a price increase of 2.6 percent. The strong demand for protective clothing brought the world’s largest manufacturer of respiratory masts a surprisingly high profit. The conglomerate, which also offers “post-it” stickers, nevertheless received its full-year goals due to the virus crisis.
However, the upcoming figures from large technology groups such as Microsoft, Amazon or Google’s parent company Alphabet are decisive for the direction of the US stock market, said Andrea Cicione, chief investment strategist at research firm TS Lombard. “This will be an important test because many companies have moved their business to the Internet as a result of the corona virus restrictions. If these heavyweights fail to deliver, the rally of the past few weeks will be questioned. ”Compared to their lows in March, the US stock markets have now risen again by around 30 percent.
The Google parent Alphabet was able to significantly increase sales and profits in the first quarter. In March, however, there was a significant slowdown in advertising revenues, CFO Ruth Porat said on Tuesday after the market closed. However, the quarterly figures were driven up by the strength of the first two months. Revenue increased 13 percent year over year to $ 41.2 billion. Profit increased 2.6 percent to $ 6.84 billion. A year earlier, a competitive penalty by the EU Commission had depressed earnings by $ 1.7 billion.
Investors also grabbed Fiat Chrysler and Ford stocks on Tuesday. They advanced up to 4.1 percent. According to the Wall Street Journal, automakers plan to restart production at their US plants on May 18.
Merck, on the other hand, was down more than three percent. The US pharmaceutical company is lowering its annual forecast due to the unclear effects of the virus crisis. Adjusted earnings per share of $ 5.17 to $ 5.37 are now expected for the full year. So far, the company had predicted $ 5.62 to $ 5.77.
The papers from the UPS parcel delivery company experienced a loss-making day. This not only cut the forecast due to the crisis, but also suspended share buybacks and cut investments. The price dropped 6 percent.
The industry was looking for good quarterly figures from Southwest Airlines according to analysts: United Airlines rose by 11.4 percent and American Airlines by 12.4 percent. Southwest Airlines itself lagged well behind by 2 percent after the company announced a capital increase.
The US motorcycle manufacturer Harley-Davidson posted a profit slump in the opening quarter due to the business closures to curb the corona pandemic. Net income decreased 45 percent to $ 127.9 million. Revenue decreased eight percent to $ 1.1 billion. However, this does not stop investors from buying the paper. The Harley-Davidson titles grew by around 13.6 percent.
The US beverage company Pepsico is canceling its annual forecast due to the uncertainties surrounding the coronavirus pandemic. So far, the Coca-Cola competitor, which is in the middle of the takeover of the energy drink manufacturer Rockstar, has wanted to increase sales organically by four percent and earnings per share by seven percent. Pepsico’s revenue increased 7.7 percent to $ 13.9 billion in the first quarter. Earnings fell about five percent to $ 1.34 billion, also due to high marketing expenses for the Super Bowl. Investors are initially not very impressed by this, the share recently gained 0.4 percent.
Look at other asset classes
On Tuesday, the oil price again failed to withstand pressure. After giving in on Monday, US crude WTI lost 5.6 percent to $ 12.06. The daily low is $ 10.07.
The somewhat milder losses compared to Monday do not point to a relaxation of the situation on the oil market. With crude oil storage capacities almost exhausted, investors feared WTI’s price drop below zero, like last week, said Harry Tchilinguirian, chief investment strategist for oil at BNP Paribas.
In the US bond market, trend-setting ten-year government bonds rose by 18/32 points to 108 16/32 points and returned at 0.60 percent. The euro eased slightly in US trade and cost $ 1.0832 at the close on Wall Street. The European Central Bank had set the reference rate at $ 1.0877 (Monday: 1.0852). The dollar had thus cost 0.9193 (0.9214) euros.
With material from Reuters.
More: Read here how the German stock market developed on Tuesday.