Investors once again moved to the sidelines again on Tuesday ahead of some key earnings reports from U.S. companies.
The Dow Jones Industrial Average fell 55.44 points to 13,328.85. The Nasdaq Composite Index lost 7.00 points to 3,091.81 and the S&P 500 Stock Index slipped 4.74 points to 1,457.15.
After the close Alcoa Inc. (NYSE: AA) kicked off the earnings parade by reporting a fourth quarter profit despite continued declines in aluminum prices.
Gold prices rebounded after falling for three consecutive sessions, up $15.90 to $1,662.20 an ounce. Oil was again little changed, down four cents to $93.15 a barrel.
Yum! Brands Inc. (NYSE: YUM), the owner of the Taco Bell and KFC fast-food chains, retreated 4.2 percent as same-store sales fell more than projected in China after a government probe into one of its former suppliers hurt demand. GameStop Corp. (NYSE: GME), the world’s largest video-game retailer, tumbled 6.3 percent amid a narrower sales forecast. Alcoa Inc., the largest U.S. aluminum producer, rose 0.9 percent as sales beat estimates.
“We’re waiting for earnings to come out,” said John Manley, who helps oversee about $212 billion as chief equity strategist for Wells Fargo Advantage Funds in New York. He spoke in a telephone interview. “Valuations are far from excessive. Yet we’ve had a strong rally very quickly. Now the market is adjusting.”
Stocks had the biggest gain in 13 months last week as lawmakers passed a bill averting spending cuts and tax increases known as the fiscal cliff. Fourth-quarter profits from S&P 500 companies probably increased 2.9 percent, according to analysts’ estimates compiled by Bloomberg. That would be the second- slowest quarterly growth since 2009, the data show.
Boeing Co. (NYSE: BA) retreated 2.6 percent to $74.13 after being downgraded to hold from buy at BB&T Capital Markets by equity analyst Carter Leake. The shares tumbled 2 percent Monday after a 787 Dreamliner operated by Japan Airlines Co. caught fire on the ground at Boston’s Logan International Airport.
Sears Holdings Corp. (Nasdaq: SHLD) slumped 6.4 percent to $40.16. Lou D’Ambrosio is stepping down as chief executive officer and Chairman Edward Lampert will take over the job as the billionaire hedge fund manager works to revive the retailer.
The sudden departure of D’Ambrosio, 48, was prompted by family health matters, the Hoffman Estates, Ill.-based company said Monday in a statement. Lampert, 50, will take over at the end of the company’s fiscal year on Feb. 2.
Genworth Financial Inc. (NYSE: GNW) slid 3.5 percent to $8.04. The insurer that brought on a new chief executive officer last week declined after Credit Suisse Group AG (NYSE: CS) downgraded the company on risks from long-term care coverage.
AutoZone Inc. (NYSE: AZO) dropped 2.2 percent to $348.25. The Memphis, Tenn.-based auto-parts retailer was cut to underweight from equal weight by Morgan Stanley (NYSE: MS) analyst David Gober, who said AutoZone is “likely not a great stock in 2013.”
Halliburton Co. (NYSE: HAL) retreated 1.3 percent to $36.19. The world’s largest provider of hydraulic-fracturing services was downgraded to neutral from overweight at JPMorgan Chase & Co. (NYSE: JPM).
Monsanto Co. (NYSE: MON) added 2.7 percent to $98.50. The world’s biggest seed company posted first fiscal-quarter earnings that surpassed analysts’ estimates and boosted its full-year forecast.
Occidental Petroleum Corp. (NYSE: OXY) gained 2.3 percent to $81.72. The largest onshore crude producer in the continental U.S. rose after reaching half its 2013 target for drilling cost cuts.
Celgene Corp. (Nasdaq: CELG) rallied 6.6 percent to $91.41. The world’s fourth-largest biotechnology company was raised to outperform from sector perform at RBC Capital Markets by equity analyst Michael Yee. The 12-month share-price estimate is $100.
The Chicago Board Options Exchange Volatility Index, known as the VIX, fell 1.2 percent to 13.62 in New York Tuesday. It tumbled 40 percent over the past six sessions, the biggest decline since November 2008.
The bull market in U.S. equities that began in 2009 may end this year, followed by a drop of as much as 30 percent in the S&P 500 by next year, according to technical analysts at UBS AG (NYSE: UBS).