[BRIEFING.COM] The S&P 500 declined 0.1% on Monday, as shares of financial stocks pulled back following another round of bank earnings. Despite the modest decline, the S&P 500 managed to close above the 2900 level in front of several key earnings reports tomorrow.
The Dow Jones Industrial Average (-0.1%) and the Nasdaq Composite (-0.1%) also lost 0.1%. The Russell 2000 underperformed with a loss of 0.4%.
Goldman Sachs (GS 199.91, -7.93, -3.8%) and Citigroup (C 67.38, -0.04, -0.1%) beat earnings expectations, but first quarter revenue for both companies declined on a year-over-year basis. Goldman's revenue also came in slightly below expectations, and the quality of its EPS beat was questioned due to lower tax and compensation rates. The S&P 500 financial sector lost 0.6%.
The two stocks had climbed alongside the broader financial space on Friday in response to a strong earnings report from JPMorgan Chase (JPM 109.94, -1.27, -1.1%). The prior move higher coupled with underwhelming results fostered some profit taking, although shares of Citigroup managed to recoup most of their losses.
The market's overall decline was kept in check following a turnaround in shares of widely-held stocks within the communication services (+0.2%) and consumer discretionary (+0.2%) sectors. Relative strength from the consumer staples (+0.7%) and health care (+0.4%) sectors was an added measure of support for the broader market.
Shares of UnitedHealth (UNH 230.20, +6.98, +3.1%) gave the health care sector a boost after the stock fell 10.3% last week on industry concerns. On a related note, UnitedHealth and Johnson & Johnson (JNJ 136.52, +0.54, +0.4%) will release their earnings reports prior to Tuesday's open.
In M&A news, Waste Management (WM 104.26, +2.47, +2.4%) agreed to acquire Advanced Disposal (ADSW 31.99, +4.85, +17.9%) for $33.15/share, representing a 22% premium versus Friday's closing price and a total enterprise value of $4.9 billion. French-based Publicis Groupe (PUBGY) agreed to acquire Alliance Data's (ADS 164.04, -16.89, -9.3%) Epsilon business for $4.4 billion in cash.
U.S. Treasuries traded in a tight range on Monday. The 2-yr yield finished flat at 2.39%, and the 10-yr yield decreased one basis point to 2.55%. The U.S. Dollar Index finished flat at 96.94. WTI crude lost 0.7% to $63.45/bbl after Russia floated the possibility that it might boost production with OPEC to increase their market share.
Reviewing Monday's economic data, which included the Empire State Manufacturing Survey for April:
- The Empire State Manufacturing Survey for April increased to 10.1 (Briefing.com consensus 9.0) from 3.7 in March with a pickup in new orders helping to drive things. The dividing line between expansion and contraction for this regional manufacturing survey is 0.0.
Looking ahead, investors will receive Industrial Production and Capacity Utilization for March and the NAHB Housing Market Index for April on Tuesday.
- Nasdaq Composite +20.2% YTD
- Russell 2000 +17.1% YTD
- S&P 500 +15.9% YTD
- Dow Jones Industrial Average +13.1% YTD