S&P 500, Nasdaq end lower on first day of August in busy earnings week

It was a day of modest gains on the Dow and modest losses on the Nasdaq and S&P as the markets ended lower on the first day of what has historically been the weak month of August. The S&P did hit a 16-month high and is now less than 5% away from its record high January 3, 2022. Q2 losses have also now been upgraded to a minus 5.9% vs a minus 7.9% last week. New factory orders are improving and layoffs accelerating, both good news on the inflation front. Volume is a little below average at 10.45 billion. 

S&P 500, Nasdaq end lower on first day of August in busy earnings week

By Echo Wang

Tue August 1, 2023 4:34 PM

DJ: 35.559.53  +100.24        NAS: 14,346.02  +29.37       S&P: 4,588.96  +6.73       7/31

DJ: 35,630.68  +71.15          NAS: 14,283.91  -62.11        S&P: 4,576.73  -12.23      8/1

 Aug 1 (Reuters) - The S&P 500 (.SPX) and Nasdaq (.IXIC) closed weaker on Tuesday, the first day of seasonally slow August, ahead of U.S. jobs data and major companies' earnings reports later this week.

U.S. stocks ended July on a strong footing, as investors welcomed better-than-expected earnings. Support also came from hopes of a soft landing for the economy which has stayed resilient as inflation has cooled with rising interest rates.  The benchmark S&P 500 (.SPX) hit a 16-month high on Monday, and is less than 5% away from breaching its record high closing level notched on Jan. 3, 2022.

"It's been a really good run in June, July. And everybody sort of knows that August was historically a pretty weak seasonal month," said Scott Ladner, chief investment officer of Horizon Investments. "So I think people are just taking the opportunity to lighten up a little bit."  Keeping a lid on the Dow's losses (.DJI), Caterpillar (CAT.N) added 8.9% as the global economic bellwether reported a rise in second-quarter profit, though it warned of a sequential fall in current-quarter sales and margins.  Uber (UBER.N) shed 5.7% after the ride-hailing company missed second-quarter revenue expectations.  Among pharmaceutical heavyweights, Pfizer (PFE.N) edged lower in choppy trading after the drugmaker's quarterly revenue fell short of Wall Street expectations, hit by declining sales of its COVID-19 products.

U.S. second-quarter earnings are now expected to fall 5.9% from a year earlier, Refinitiv data on Tuesday showed, compared with a 7.9% decline estimated a week earlier.

U.S. manufacturing appeared to have stabilized at weaker levels in July as new orders gradually improved, while a survey showed factory employment dropped to a three-year low, suggesting that layoffs were accelerating.  Shares of megacap growth companies such as Tesla (TSLA.O) and Amazon.com (AMZN.O), whose valuations drop when borrowing costs rise, fell as the benchmark 10-year U.S. Treasury note yield climbed over 4%.  Arista Networks (ANET.N) rose 19.7% as the network gear maker forecast quarterly revenue above estimates after delivering better-than-expected results.

The Dow Jones Industrial Average (.DJI) rose 71.15 points, or 0.2%, to 35,630.68. The S&P 500 (.SPX) lost 12.23 points, or 0.27%, at 4,576.73 and the Nasdaq Composite (.IXIC) dropped 62.11 points, or 0.43%, to 14,283.91. 

Volume on U.S. exchanges was 10.45 billion shares, compared with the 10.72 billion average for the full session over the last 20 trading days.

Shares of Norwegian Cruise Line (NCLH.N) tumbled 12.1% after it forecast third-quarter profit below estimates, citing higher costs.  JetBlue Airways (JBLU.O) stocks dropped 8.3% after it lowered its annual profit forecast due to a hit from the termination of its revenue-sharing deal with American Airlines (AAL.O). 

Declining issues outnumbered advancers on the NYSE by a 2.16-to-1 ratio; on Nasdaq, a 1.67-to-1 ratio favored decliners.  The S&P 500 posted 23 new 52-week highs and three new lows; the Nasdaq Composite recorded 84 new highs and 70 new lows.