U.S. equities are shrinking as investors enter a profit flood

What is driving the market?

Earnings reports, which will begin strong during the quarter, will remain under control as investors measure the strength of the economic recovery from the COVID-19 pandemic, analysts said. The orientation of companies on the prospects for next year may be even more important in determining the direction of the market.

“The business outlook may indicate whether the recovery from last year’s low could continue,” Charalambos Pissouros, senior market analyst at JFD Group, said in a note.

Read: Why it may still be the early days for stock market inflation

“In our view, with most major central banks suggesting that this year’s inflation hikes are likely to be temporary and remain committed to keeping their monetary policies weaker, we believe that even if the benefits they disappoint a bit, there are decent opportunities for stocks to pick up again and continue to trend north, ”he said.

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Analysts noted that new cases of COVID-19 were collected, even while the vaccine was being developed. The United States averaged 67,175 new cases a day last week, 4% more than the average two weeks ago. But the new global case count nearly hit a record high of more than 750,000 on Sunday and Monday, according to the Washington Post, as India and Brazil remain hot spots.

See: Why the increase in COVID-19 cases keeps Morgan Stanley on the decline in risk assets

“There is concern that the expansion of covid outside the United States could hamper global economic recovery and drag the lead of U.S. companies as reported, especially multinationals,” said Fiona Cincotta, senior financial market analyst at City Index.

Which companies are concentrated?

• Apple Inc.
  AAPL,
  -1.10%
  Tuesday was expected to provide an annual update to high-end iPads, along with other new products, and introduce a paid subscription option to your podcast app when you hold an event in New York. Shares of Apple rose 0.1%.

• Actions of International Business Machines Corp.
  IBM,
  + 4.03%
  they rose 4% after tech giant surpassed Wall Street estimates with a surprise rise in revenue, reaching a four-quarter streak of falling sales.

• United Airlines Holdings Inc.
  UAL,
  -8.82%
  lost more than $ 1.3 billion in the first three months of 2021, but executives said a tight cash flow metric has turned positive and promised new international routes to countries that allow vaccinated travelers will help the airline to recover from the devastation of COVID-19. pandemic. Shares fell more than 7%.

• Johnson & Johnson
  JNJ,
  + 2.67%
  On Tuesday, first-quarter earnings and sales were recorded that exceeded expectations, citing the strength of its pharmaceutical business and the continued recovery of medical devices. Shares rose 1.4%.

• Actions of Abbott Laboratories
  ABT,
  -4.31%
  they fell 4%, although the company achieved results that exceeded profit expectations during a quarter in which sales of its COVID-19 tests accounted for 20% of total revenue.

• Actions of Procter & Gamble Co.
  PG,
  + 1.19%
  they fell 0.4% after the consumer commodity maker reported third-quarter tax gains in excess of estimates and said it would raise prices for certain product categories.

• Actions of Kansas City Southern
  KSU,
  + 16.11%
  shot up 15%, after The Wall Street Journal reported it Canadian National Railway Co.
  CNI,
  -6.47%

  CNR,
  -6.10%
  planned to make a takeover bid for the rail operator of approximately $ 30 billion, which would exceed Canadian Pacific Railway Ltd.
  CP,
  -1.91%

  CP,
  -1.41%
  previously agreed on the purchase offer.

• Actions of Philip Morris International Inc. PM rose 0.6% after cigarette vendor reported first-quarter earnings and revenue that exceeded expectations, as growth in shipments of heated tobacco units helped offset declining cigarette shipments. .

See: Tobacco stocks are ash after reports that Biden administration may require nicotine reductions

What do other markets do?

• The yield on the 10-year Treasury note BX: TMUBMUSD10Y
  it fell 0.5 basis points to 1.589% as the bond market remained in the consolidation mode after a recent recovery in short hedging that saw yields retreat from the highs of 14 months. Bond yields and prices are moving in opposite directions.

• The ICE Index US Dollar DXY,
  + 0.06%,
  a measure of the coin against a basket of six main rivals was flat.

• Futures on oil rose, with the US benchmark CLM21,
  -1.50%
  0.3% more, at $ 63.63 a barrel.

• GC00 Gold Futures,
  + 0.47%
  erased early weakness to boost it further, rising 0.4% to $ 1,777 an ounce.

• In Europe, the Stoxx 600 SXXP,
  -1.90%
  and the FTSE 100 UKX in London,
  -2.00%
  they each fell 1.5%.

• In Asia, the Hong Kong Hang Seng HSI Index,
  + 0.10%
  increased 0.1%, while the Shanghai Composite SHCOMP,
  -0.13%
  fell 0.1% and the Japanese Nikkei 225 NIK,
  -1.97%
  fell 2%.