Stocks edge lower as boost from manufacturing data fades

Stocks edge lower as boost from manufacturing data fades

Dow Inc. makes debut among components of the Dow Jones Industrial Average

U.S. stocks retreated at the start of trade Tuesday, with investors on the sidelines a day after a rally inspired by upbeat manufacturing data out of China and the U.S.

What are major indexes doing?

The Dow Jones Industrial Average DJIA, -0.29% fell 54 points, or 0.2%, to 26,202, weighed down in large part by a weak earnings report from Walgreens Boots Alliance Inc. WBA, -12.27% The S&P 500 index SPX, -0.03% edged down about 1 point, or less than 0.1%, to 2,865, while the Nasdaq Composite index COMP, +0.13% fell 14 points, or 0.2%, to 7,815.

What’s driving the market?

Investors appeared to be taking a breather after a Monday rally that saw the Dow rally 301 points, or 1.2%, while the S&P 500 rose 1.1% and the NasdaqCOMP, +0.13% gained 1.2%. Stocks got off to a strong start after a purchasing index reading for China pointed to the first expansion in activity in the country’s manufacturing sector in four months, which was followed by a stronger-than-expected reading for the Institute for Supply Management’s U.S. manufacturing index.

Data out Tuesday on durable goods orders, however, could be helping temper optimism, after the Commerce Department said they fell 1.6% in the month of February, while a key gauge of business investment also fell by 0.1%, the third decline in four months.

Investors are also keeping an eye on the Treasury market. A closely watched measure of the yield curve — the spread between the yield on the 10-year Treasury note TMUBMUSD10Y, -0.75% and the 3-month Treasury billTMUBMUSD03M, +0.42% — turned negative, or inverted, on March 22. Such an inversion is viewed as a reliable warning of a potential recession a year or more in the future.

A subsequent retreat by Treasurys, however, has seen yields at the long end rise in recent sessions, moving the curve out of inversion. Yields rise as bond prices fall.

What shares are in focus?

Shares of Wallgreens were off 13% after the drugstore chain reported second-quarter earnings that fell short of Wall Street expectations, while cutting its full-year outlook. The stock’s premarket losses could cut roughly 30 points from the Dow when the market opens.

Shares of rival CVS Health Corporation CVS, -3.48% appeared to fall in sympathy, moving down 4% Tuesday morning.

Lamb Weston Holdings Inc. LW, +2.13%   stock rose 5%, after the frozen-potato company third-quarter earnings and sales that beat expectations and raised its full-year guidance.

Shares of Tesla Inc. TSLA, -1.21% could be in focus Tuesday, as investors await data due this week on how many cars it built and sold for the most recent quarter. Shares fell 1.2% early Tuesday, after rising 3.3% Monday.

Shares of Delta Air LinesInc. DAL, +6.53%   rose 4.3%, after the company reported its operating performance for the month of March while announcing the renewal of its 11-year credit card pact with American Express Co. AXP, -0.61%  

GameStop Corp. GME, -1.64% could be in focus, as investors await the company’s fourth-quarter results, due after the market closes. Shares in the videogame retailer were down 1.2% Tuesday morning, and have declined 18.9% year-to-date.

Material-sciences company Dow Inc. DOW.W, +5.29%  makes its publicly traded debut on the Dow industrials after the materials science company was spun off from Dow-component DowDuPont Inc. Shares were up 4.6% in early Tuesday trade.

What are analysts saying?

“Traders are growing increasingly optimistic that the world’s two largest economies are starting to stabilize, amid better recent data prints. Yields on 10-year bonds have now gained considerably since their inversion just a week or so go,” said Jasper Lawler, head of research at London Capital Group, in a note.

How are other markets trading?

Asian markets traded mixed Tuesday, with Japan’s Nikkei 225 NIK, -0.02%virtually unchanged, while Hong Kong’s Hang Seng index HSI, +0.21% and China’s Shanghai Composite SHCOMP, +0.20% index added 0.2% each. European markets were aiming to log their third straight day of gains, with the Stoxx Europe 600 up 0.3% Tuesday.

In commodities markets, the price of crude CLK9, +1.10% was on the rise for a third straight session, while gold prices inched lower. The U.S. dollar DXY, +0.10%meanwhile, ticked higher against rivals.

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