Traders work on the floor of the New York Stock Exchange during morning trading in New York City.Â
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Stocks fell Tuesday, taking a breather from the rally that lifted them to record highs, as traders sifted through the latest corporate earnings reports.
The Dow Jones Industrial Average lost 333 points, or 0.8%. The S&P 500 slipped 0.9%, and the Nasdaq Composite fell 1.3%.
ASML fell 17% to lead chipmakers lower. The company’s CEO warned of “cautiousness” among customers and said a “recovery is more gradual than previously expected.” Nvidia and AMD shed 4% and 5%, respectively. UnitedHealth was down 8% after the company trimmed its full-year earnings outlook. Bank of America ticked 1% higher on better-than-expected results.
So far, about 40 S&P 500 companies have reported third-quarter results. Of those, 80% have beaten analyst expectations, per FactSet.
Wall Street is coming off a winning session that propelled the S&P 500 and Dow to all-time highs. Notably, the Dow added more than 200 points to finish above the 43,000 mark for the first time.
Despite Tuesday’s declines, the three major averages are higher on the month and seem on track to overcome a historically volatile season. But Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, says that stocks aren’t out of the woods just yet.
“It’s hard to get any better than than where we are right now. This has quickly become a buy high, sell higher market with the S&P at all-time highs,” he told CNBC. “To a degree, we’re perhaps due for a little bit of a pullback.”
However, a strong third-quarter earnings season and robust fundamental backdrop could sustain stocks at their current levels into the year’s end. Sandven’s year-end target for the benchmark is 6,000, which corresponds to a modest 2% increase.
“For equity investors, these are the best of times and the worst of times. U.S. equity year-to-date performance remains superb and broad-based. Conversely, the wall of worry looms as valuations are elevated, election-related nuances remain, global tensions are heightened, and so on,” he added. “Near term, there’s much to like about the equity market. If you look toward the end of the year and beyond, we expect volatility to be more the norm versus exception.”
