U.S. equities and stock exchange traded funds weakened Tuesday as traditionally stalwart companies revealed lackluster quarterly earnings results and lingering geopolitical concerns weighed on investors.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), declined 0.3% Tuesday.
Weighing on market sentiment Tuesday, Goldman Sachs (NYSE: GS) revealed earnings that missed expectations as trading revenue dropped, and company shares experienced their worst daily percentage drop since June 24, a day after the U.K.’s Brexit vote, reports Chuck Mikolajczak for Reuters.
Additionally, Johnson & Johnson (NYSE: JNJ) slipped on its worst day in over eight years after the company’s quarterly revenue fell short of expectations.
“Those tend to be companies who manage earnings a little better, the fact they have missed perhaps isn’t a very good indication,” Tim Ghriskey, chief investment officer of Solaris Asset Management, told Reuters. “There is some nervousness out there about the economy, geopolitical issues and general unpredictability as well.”
The initial stumble out of the opening gates of the current earnings season is particularly worrying as investors are concerned about market valuations after a strong post-election rally based on expectations of pro-growth policies under the Trump administration.
“The market’s taken a bit of a pause lately, and part of that has to do with markets in the U.S. being at the high end of valuations,” Mark Watkins, regional investment strategist at the Private Client Group at U.S. Bank, told the Wall Street Journal. “If we see earnings that miss or are below expectations, that could be a warning sign.”
Meanwhile, safe-havens and more conservative bets continued to attract greater interest, with gold bullion strengthening and U.S. Treasury yields rising, ahead of crucial presidential elections in France, bubbling tensions between the U.S. and North Korea, and early calls for elections in Britain.
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