Stock Market Falls Ahead of Alphabet, Microsoft Earnings

US stocks fell, extending their April losses, as investors digested earnings reports from leading companies and weighed concerns about inflation and the spread of Covid-19 in China.

The S&P 500 shed 1.9% in Tuesday afternoon trading, a day after tech stocks led major indices higher. The Dow Jones Industrial Average declined 1.6%, while the technology-heavy Nasdaq Composite lost about 3%. Ten of the S&P 100’s 11 sectors were recently in the red, with consumer discretionary and tech stocks among the leading decliners.

All three indices are on track to lose ground this month, with the Nasdaq currently down more than 11%.

Fears about a resurgence of Covid-19 cases in China, and strict lockdowns imposed to fight the outbreak there, have heightened investors’ concerns about the global economy and prompted choppy trading in recent sessions. Soaring inflation is weighing on companies and consumers, while the Federal Reserve’s indications that it will quickly tighten monetary policy threaten to drag on growth.

“We’re in a world-wide tightening cycle now, and so we have to let the air out of many of these assets,” said Mace McCain, chief investment officer at Frost Investment Advisors.

Assets considered havens in times of trouble, such as Treasury bonds, are being pressured by inflation and expectations for tighter central-bank policy along with stocks, complicating matters for investors seeking shelter during recent volatility. Gold, another haven, rose 0.4% on Tuesday, but prices remain near their lowest level since February.

The yield on the 10-Year US Treasury note declined to 2.761% from Monday’s 2.825%. The yield on the benchmark note remains close to its highest level since 2018 as investors have sold bonds in anticipation of higher interest rates. Bond yields rise as prices fall.

“We had a beautiful scenario over the last 18 months: Growth was accelerating and bond yields were falling — the perfect combination for risk assets,” said Hani Redha, a portfolio manager at PineBridge Investments. “Now we have the complete opposite.”

In earnings news, General Electric fell more than 11% after warning that supply-chain disruptions would pressure its business this year. Universal Health Services lost almost 10% after the hospital operator said earnings fell 27% in the first quarter from a year ago.

United Parcel Service fell more than 3%. The company said quarterly revenue rose more than 6%, though it shipped fewer packages than it did in the year-ago quarter. 3M,

which reported better-than-expected first-quarter sales, fell 3%.

Shares of Arch Resources rose almost 20% after the coal company reported earnings and revenue that beat expectations. Sherwin-Williams added more than 9% on stronger-than-expected first-quarter earnings and revenue.

Tesla,

shares of which jumped last week after the electric-vehicle maker reported quarterly results, were recently down 9.6%, retreating to levels last seen in late March. The stock is part of the S&P 500’s consumer discretionary sector, which fell about 4%.

Microsoft,

Google parent Alphabet,

GOOG -1.74%

General Motors,

Visa and Mondelez International are set to report earnings after markets close.

The S&P 500’s technology sector fell 2.6% Tuesday afternoon. A shift in consumer spending from tech-centric goods to in-person services in the latest phase of the pandemic is weighing on investors’ enthusiasm for the sector, analysts said.

“We may now be realizing the group that experienced a lot of growth, your tech companies, that growth may have been over-extrapolated,” said Jason Pride, director of private wealth investments at Glenmede.

The Federal Reserve’s main tool for managing the economy is to change the federal-funds rate, which can affect not only borrowing costs for consumers but also shape broader decisions by companies like how many people to hire. WSJ explains how the Fed manipulates this one rate to guide the entire economy. Illustration: Jacob Reynolds

Brent crude futures rose 3.5% to $ 105.71 a barrel. The international oil benchmark fell below the $ 100 level Monday before rebounding. US benchmark oil prices, known as West Texas Intermediate, rose 4.2% to $ 102.69 a barrel Tuesday.

In economic news, US consumer confidence fell slightly in April, the Conference Board said on Tuesday. Orders for durable goods — consumer products designed to last for more than three years — rebounded in March following a weak February.

The S&P CoreLogic Case-Shiller National Home Price Index, a measure of average home prices in major US metropolitan areas, rose 19.8% in the year that ended in February, up from a 19.1% annual rate the prior month. Higher prices and rising mortgage rates are expected to weigh on home sales this year. Sales of new homes fell 12.6% in March from a year ago, the Commerce Department said Tuesday.

Overseas, the Stoxx Europe 600 finished the day down 0.9%.

In mainland China, the Shanghai Composite Index fell 1.4%, lower for a second consecutive day, as investors continued to worry about the threat of new Covid-19 lockdowns. The People’s Bank of China vowed to step up support for the economy Tuesday in an attempt to calm the jitters, but the move only had a temporary effect on local markets.

Traders worked on the floor of the New York Stock Exchange on Monday.


Photo:

Spencer Platt / Getty Images

“I do not see any catalyst for price appreciation until we get some tangible, meaningful moves on the policy front,” said John Woods, Asia Pacific chief investment officer at Credit Suisse,

referring to Chinese stocks.

Elsewhere in Asia, Tokyo’s Nikkei 225 index rose 0.4%, while South Korea’s Kospi edged up 0.4%. Hong Kong’s Hang Seng Index rose 0.3%.

—Rebecca Feng contributed to this article.

Write to Will Horner at william.horner@wsj.com and Orla McCaffrey at orla.mccaffrey@wsj.com

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