Stocks fell for the first time in five days on Tuesday as investors grappled with the latest news regarding U.S. coronavirus stimulus and treatments as well as the first batch of corporate earnings.
The major averages fell to their lows of the day at around 2:30 p.m. ET after U.S. regulators paused Eli Lilly's late-stage coronavirus trial due to safety concerns. The news follows Johnson & Johnson halting its coronavirus vaccine trial after an "adverse event" was reported. Eli Lilly shares were down 2.9% and J&J slid 2.3%.
House Speaker Nancy Pelosi, D-Calif., told fellow lawmakers in a letter that the White House's proposal for new coronavirus aid has insufficient offers on health-care issues. Meanwhile, Senate Majority Leader Mitch McConnell, R-KY, said Tuesday the legislative body would vote next week on a smaller stimulus package.
Pelosi and McConnell's comments came after the Trump administration called on Congress over the weekend to pass a smaller $1.8 trillion coronavirus relief bill as negotiations on a bigger package continue to run into roadblocks.
"The steady accumulation of negative COVID headlines ... and the fading chances of near-term, pre-election fiscal stimulus has spurred an aggressive shift away from cyclical stocks and back into growth/momentum, returning the market to where it was over the summer," said Adam Crisafulli, founder of Vital Knowledge, in a note.
JPMorgan Chase reported better-than-expected results for the third quarter. Citigroup, another major bank, also posted better-than-expected results for the previous quarter. Dow member Johnson & Johnson posted earnings that beat analyst expectations and raised its full-year profit guidance.
Asset-management giant BlackRock saw its shares gain 3.9% after the company reported earnings that beat analyst expectations. BlackRock also said its assets under management grew to $7.81 trillion from $7.32 trillion in the previous quarter.
Third-quarter earnings are expected to have declined significantly; however, traders are hoping for a surprise to the upside.
"This earnings season, corporate America will get closer to the return of earnings growth, which is likely in the first quarter of 2021," said Ryan Detrick, chief market strategist at LPL Financial. "We probably will have another decline in profits for third quarter 2020, though potentially only about half as big as last quarter's."
Apple unveiled on Tuesday its first-ever 5G iPhone. Morgan Stanley analyst Katy Huberty called this "the most significant iPhone event in years" ahead of the event. Apple shares dropped 2.7%, however, after rallying 6.4% on Monday.
Disney rallied 3.2% after announcing a major company reorganization with streaming at the forefront of its business. Disney said it is centralizing its media businesses into a single organization that will be responsible for content distribution, ad sales and Disney+.
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