Earnings Season Outlook Drags on U.S. Stock ETFs | ETF Trends

U.S. markets and stock ETFs slipped Monday as concerns over the upcoming earnings season begin to nibble away at investors’ confidence.

On Monday, the Invesco QQQ Trust (NASDAQ: QQQ) was up 0.1%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) dropped 0.4% and SPDR S&P 500 ETF (NYSEArca: SPY) was 0.1% lower.

Among the major contributors to the broad market selling, Boeing (NYSE: BA) shares declined 4.7%, pulling on both the Dow and S&P 500, after the company said it would cut production of 737 Max aircraft by almost 20%, Reuters reports.

Additionally, the industrial sector was further pressured by General Electric (NYSE: GE) 7.1% plunge after J.P. Morgan downgraded GE shares to “underweight.”

The Federal Reserve’s decision to stand pat on interest rates and hopes over a trade deal with China have helped the lift stock market toward its previous record highs. Most of the recent rally has been supported by bets that economic growth will be strong enough to support corporate profits but slow enough to keep the Fed from tightening its monetary policy.

Looking ahead, the lowered earnings expectations and concerns over economic growth are beginning to pressure markets. The earnings season will be in full swing with major banks scheduled to kick-off first quarter earnings on Friday. However, according to Refinitiv data, analysts project a 2.3% dip in S&P 500 earnings.

“This is mostly a wait-and-see approach by investors before the next batch of corporate earnings or macro data comes out,” Lisa Erickson, head of traditional investment at U.S. Bank Wealth Management, told Reuters. “We’re cautious but constructive on earnings, because of the bar being lowered so much and we have seen a plateau in economic data in the back drop of lower interest rates, which is at least providing for companies to do better than expectations.”

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