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Wall Street drifts lower as earnings season gets underway

NEW YORK (AP) — Stocks are drifting lower in early trading on Wall Street Tuesday as earnings reporting season gets underway for big companies.

The S&P 500 was down 0.3%, taking a pause after a leap for Big Tech stocks capped a four-day winning streak for the index on Monday. The Dow Jones Industrial Average was down 75 points, or 0.2%, at 28,762, as of 9:45 a.m. Eastern time, and the Nasdaq composite was 0.2% lower.

The muted start to trading comes as many forces are pushing and pulling on markets simultaneously. Coronavirus counts are rising at a worrying degree in many countries around the world, and Johnson & Johnson said late Monday it had to temporarily pause late-stage study of a potential COVID-19 vaccine “due to an unexplained illness in a study participant.” Uncertainty about the prospects of more stimulus for the economy from Washington is also hanging over markets.

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Some measure of clarity is arriving as CEOs line up to report how their companies fared during the summer. Wall Street is expecting another sharp drop in profits for the third quarter, nearly 21% for S&P 500 earnings per share from a year earlier. But if that proves correct, it would not be as bad as the nearly 32% plunge for the spring, according to FactSet.

Several companies kicked the season off on Tuesday with better-than-expected reports. JPMorgan Chase, Johnson & Johnson, Citigroup and BlackRock all reported stronger results for the summer than analysts had forecast. Their stocks, though, were mixed following the releases. BlackRock jumped 4.3%, while the others weakened.

Delta Air Lines reported a worse loss than Wall Street had forecast, as the pandemic keeps many fliers grounded, and its shares fell 2.5%. Other airlines and travel-related companies were also weak, and Royal Caribbean dropped 10.6% for the biggest loss in the S&P 500.

On the winning side was The Walt Disney Co., which rose 3.7% for one of the biggest gains in the S&P 500 after it announced a major reorganization of its company to focus on Disney Plus and its other streaming services.

The yield on the 10-year Treasury fell to 0.73% from 0.79% late Friday. Treasury markets were closed Monday for a holiday.

A government report showed that prices for consumers were 0.2% higher in September than August. That matched economists’ expectations, and it also showed that month-over-month inflation has slowed since strengthening in the summer.

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Lower inflation gives the Federal Reserve more leeway to keep interest rates low, though it has said it may keep its benchmark rate at nearly zero even if inflation tops its 2% target.

While the Federal Reserve keeps the accelerator floored on its support for the economy and markets, Congress and the White House are struggling to deliver more aid of their own after a round of stimulus approved earlier this year expired.

House Speaker Nancy Pelosi called the White House’s latest proposal insufficient in a letter to Democratic colleagues Tuesday and said significant changes are needed. If stimulus can’t arrive before the election, some investors have gotten more optimistic about the chances of a big support package next year if Democrats sweep the upcoming election.

In European stock markets, Germany’s DAX lost 1%, and France’s CAC 40 fell 0.6%. The FTSE 100 in London dropped 0.5%.

In Asia, Japan’s Nikkei 225 rose 0.2%. South Korea’s Kospi and stocks in Shanghai were close to flat.

Sentiment in Asia got a modest boost from China’s report that its exports rose 9.9% from a year earlier to $239.8 billion in September, while imports gained 13.2% to $202.8 billion.

Chinese exporters have benefited from China’s relatively early reopening from pandemic shutdowns and from strong global demand for masks and medical supplies.

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AP Business Writers Elaine Kurtenbach and Joe McDonald contributed.

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