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The Nasdaq, S&P 500, and Dow all closed lower as US equities fell to begin the week ahead of anticipated quarterly reports.
On Monday July 11th, US equities took a hit as the market awaits earnings reports of major companies. These impending reports come with added anticipation because they could serve as a barometer for how inflation affects businesses.
All three major indexes suffered declines, with the Dow Jones Industrial Average losing 164.31 points, or 0.52%, to close at 31,173.84. Meanwhile, the S&P 500 dropped by 1.15% to 3,854.43, while the Nasdaq Composite shed 2.26% to close at 11,372.60.
Breakdown of Some US Equities’ Slip Ups
The S&P 500’s consumer discretionary sector dipped approximately 2.8%, with information technology dropping 1.4%. Meanwhile, the Nasdaq mainstays such as Amazon (NASDAQ: AMZN) and Alphabet (NASDAQ: GOOGL) each declined by over 3%. Other Nasdaq-featured companies to slip up include EV-manufacturing giant Tesla (NASDAQ: TSLA) and streaming giant Netflix (NASDAQ: NFLX). Both platforms slid 6.5% and 5.2% respectively.
A trio of Dow-based stocks, including Nike (NYSE: NKE), Walt Disney (NYSE: DIS), and Caterpillar (NYSE: CAT), all dropped more than 2%. Furthermore, the shares of social media giant Twitter (NYSE: TWTR) also plunged 11.3% after Elon Musk terminated his $44 billion acquisition deal.
“It’s always about earnings,” explained Tim Lesko, Director & Senior Wealth Advisor at Mariner Wealth Advisors. Further speaking on the development, he said:
“The expectation has been for a year now that it’s not about the trailing earnings, it’s about the future economic expectations. It really hasn’t mattered what people have reported in the way of revenue earnings. It’s been the talk that they’ve had about how they expect their future business to look.”
In addition, Cresset Capital’s founding partner Jack Ablin also commented on the recent fall in US equities. According to Ablin, most companies would look to pare down their quarterly outlooks to better weather endemic macro-economic factors. Such debilitating factors include soaring prices, stagnating growth as well as the Federal Reserve’s aggressive policy on interests.
Companies slated to report their quarterly earnings this week include PepsiCo and Delta Air Lines on Tuesday and Wednesday, respectively. Furthermore, banking giants Wells Fargo, JPMorgan Chase, Morgan Stanley, and Citigroup are also expected to post their financial bottom lines this week.
Casino Stocks Underperform as a Result of Covid-triggered Factors in China
Meanwhile, some companies already posted results on Monday. Casino stocks, including Wynn Resorts (NASDAQ: WYNN) and Las Vegas Sands (NYSE: LVS), led the losses on Monday. Each company’s stock slid by more than 6% due to the worsening Covid situation in China where they have a strong presence.
The Chinese government shuttered businesses to better contain the outbreak. The government’s steps included a week-long cessation of casino operations in the autonomous region of Macau.
Although renewed Covid cases were commonly associated with the Greater Chinese region, some observers suggest global cases too. For instance, Adam Crisafulli, Founder, and President of market commentator Vital Knowledge, explained that:
“Covid headwinds aren’t just a Chinese phenomenon – cases are climbing globally.”
However, Crisafulli further added that the risk of lockdowns in countries such as the US and EU member states remained very low.