Wall Street edged lower on Monday, weighed down by financials as lackluster bank earnings put a damper on investor enthusiasm.
But while all three major U.S. stock indexes were down, the S&P 500 remained within a percent of its all-time high.
Following a first-quarter rally that marked the best quarterly performance for U.S. stocks in nearly a decade, stocks have been in a holding pattern in April ahead of first quarter reporting season.
Goldman Sachs dipped 3.3% after the investment bank’s first quarter revenue came in below analyst expectations.
Citigroup Inc posted higher-than-expected earnings as cost-cutting offset falling revenues. Its shares were essentially flat.
“Investors are in total earnings mode, wondering if the better-than-expected earnings reports on Friday will be carried over into the new week and the entire reporting period,” said Sam Stovall, chief investment strategist of CFRA Research in New York. “But because of the less-than-ebullient earnings report from Goldman, investors are not convinced that it will be a positive quarter.”
With first quarter reporting season shifting into high gear, analysts now see S&P 500 companies posting a 2.1% year-on-year decline in profits. While an improvement over recent estimates, it would still mark the first annual decline in earnings since 2016.
However, of the 33 companies in the S&P 500 that have reported thus far, 81.8% have beaten Street estimates, better than the 65% average beat rate since 1994.
Bank of America Co, Morgan Stanley, Netflix Inc, Johnson & Johnson, Textron Inc, Honeywell International Inc Schlumberger NV and American Express Co are among the closely-watched earnings expected this holiday-shortened week.
Aside from earnings, “we still have to be watchful for global geopolitical events such as the U.S.-China trade discussion,” Stovall warned.
As trade talks progress, U.S. negotiators have softened their demands that China curb industrial subsidies as a condition for a deal, marking a retreat from a core U.S. objective.
“It’s a net positive,” Stovall added. “The President wants to get some sort of deal signed so he can move on.”
The Dow Jones Industrial Average fell 26.86 points, or 0.1%, to 26,385.44, the S&P 500 lost 2.72 points, or 0.09%, to 2,904.69 and the Nasdaq Composite dropped 18.53 points, or 0.23%, to 7,965.63.
Of the 11 major sectors in the S&P 500, six were in the red.
Financials snapped their three-day winning streak, falling 0.6%.
Waste Management Inc rose 2.6% following its announcement that it would buy smaller rival Advanced Disposal Services Inc for about $3 billion.
Boeing Co slid 1.1% after U.S. President Donald Trump tweeted that the planemaker should fix and “rebrand” its troubled 737 MAX jet.
Lyft Inc extended its slide, falling 5.8%. The ride-hailing platform is now trading about 22% below its $72 offer price since its March 29 debut.
Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.84-to-1 ratio favored decliners.
The S&P 500 posted 54 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 70 new highs and 36 new lows.
