Investors Have No Reason to Buy

On Wall Street, stock prices fell on Tuesday for the second consecutive day as investors remain cautious at the start of the quarterly earnings season for companies.

The Dow Jones index weakened by 55 points, or 0.41 percent, to 13,328 points, while the S&P 500 index slid 0.32 percent to 1,457 points, and the Nasdaq index fell 0.23 percent to 3,091 points.

After the S&P 500 index jumped 4.6 percent last week, reaching its highest level since December 2007, investors have been cautious in recent days, causing stock prices to gradually decline.

“Uncertainty regarding corporate earnings, along with uncertainty surrounding negotiations between Democrats and Republicans on the upper limit of government borrowing, does not give investors reasons to buy stocks,” says Bucky Hellwig, president of BB&T Wealth Management.

It is expected that corporate earnings for the fourth quarter will be slightly better than in the third, but not significantly.

In a Reuters survey, analysts expect that earnings for companies in the S&P 500 index in the last quarter of last year rose by 2.7 percent, while revenues increased by 1.9 percent compared to the same period the previous year.

After the market closed, Alcoa reported that it achieved a profit of $64 million in the past quarter, excluding one-time items, or about 6 cents per share, which is in line with expectations.

The revenue of the largest American aluminum producer reached $5.9 billion, which is slightly above expectations but 1.5 percent lower than a year earlier. Alcoa’s stock rose by 1.3 percent in extended electronic trading.

Thanks to better quarterly results than expected, the stock price of biotech giant Monsanto rose by 2.5 percent.

The caution of investors is indicated by below-average trading volume. On Wall Street, NYSE MKT, and Nasdaq, 6.2 billion shares changed hands yesterday, while last year the average daily volume was 6.4 billion.

European markets also traded cautiously yesterday. The London FTSE index weakened by 0.18 percent to 6,053 points, while the Frankfurt DAX fell by 0.48 percent to 7,695 points. The Paris CAC, on the other hand, strengthened by 0.03 percent to 3,705 points.