Stock market set to start second quarter in the red as investors look to data, earnings – MarketWatch

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U.S. stocks tilted lower on Monday, with investors starting the second quarter by looking ahead to the coming earnings season for confirmation that U.S. corporations were seeing the same kind of improvement that has been reflected in the market’s recent gains.

The Dow Jones Industrial Average DJIA, -0.35% slipped 42 points, or 0.2%, at 20,621, while the S&P 500 index SPX, -0.43% retreated 6 points, or 0.3%, at 2,356. The Nasdaq Composite Index COMP, -0.40% slumped 8 points, or 0.2%, to 5,904, an advance of 0.2%. The tech-laden gauge briefly hit an intraday all-time high at 5,928.93.

Last week, the first quarter finished with solid gains, with major indexes scoring advances of 4.6% to 9.8%.

That rally has taken Wall Street to repeated records, and the scale of the move has some analysts concerned about equity valuations.

“I expect we’ll see some softness until earnings start to come in. Right now we’re positioning for earnings to be strong, particularly in the tech, financial, and health-care sector, but there is a broad concern about valuation right now,” said Wayne Kaufman, chief market analyst at Phoenix Financial Services.

“We’re leaving a time when you can just buy the broad market. I think indexes will be OK going forward, but there will be greater opportunities for stock pickers or people who go after specific areas of the market.”

The solid results posted in the first quarter came with weaker performance in March as the so-called reflation trade—investors pouring money into stocks in hopes of stimulative policies from U.S. President Donald Trump—pulled back somewhat.

The upward momentum also has stalled amid concerns over lack of clarity with the timing of tax reform in the U.S. The market’s rally over the past several months has come on expectations that the Trump administration would pass policies on taxes and regulation that would accelerate economic growth; however, a health-care reform bill was recently pulled from Congress after it was decided it didn’t have the votes to pass. That raised questions about how easily Trump could pass his agenda.

Need to know: Trump presidency: a ‘buy low’ candidate?

See: What would it take to trigger the ‘Fed put’?

Data and Fed speakers: In the latest economic data, the U.S. Markit manufacturing purchasing manager’s index fell to 53.3 in March from 54.2 the previous month. A reading of manufacturing from the Institute for Supply Management for March fell to 57.2 from 57.7, but the employment-index hit a six-year high.

Economic data will move to the forefront this week, with Friday’s jobs numbers likely the biggest focus before companies begin reporting in the middle of the month. Some are concerned that the strong start to U.S. employment growth in the first two months of 2017 will be difficult to maintain.

Read: Economic data on watch as sleepy stock market awaits earnings season

Among Federal Reserve speakers, New York Fed President William Dudley is scheduled to make opening remarks at an economic press briefing on household borrowing, student debt and homeownership at 10:30 a.m. Eastern.

Philadelphia Fed President Patrick Harker will speak on financial technology at the University of Pennsylvania at 3 p.m. Eastern. Richmond Fed President Jeffrey Lacker is scheduled to speak on the Wall Street concept of “too big to fail” at Washington & Lee University in Lexington, Va., at 5 p.m. Eastern.

Stocks to watch: Shares of Tesla Inc. TSLA, +5.07%  rose 3.3% after the electric-car maker beat expectations with 25,000 deliveries in the first quarter.

Ford Motor Co. F, -2.79%  fell 1.8% after its March sales data, while General Motors Co. GM, -3.86%  lost 2.9%.

DryShips Inc. DRYS, -20.61%  plummeted 16% after the operator of cargo ships announced a private offering of up to $226.4 million worth of its shares, and a deal to buy six vessels.

Read: An ‘all-star lineup’ of the best stocks in each sector

Read: Over 60% of stock investors made money in March—even as Snap IPO hurt many

Other markets: Asian markets ADOW, +0.38%  finished modestly higher on Monday, while the Europe Stoxx 600 index SXXP, -0.16% SXXP, -0.16% traded flat. The FTSE 100 index UKX, -0.29%  also kicked off the second quarter on a subdued note.

The ICE Dollar Index DXY, +0.04% which measures the value of the U.S. dollar relative to a basket of foreign currencies, traded up 0.26% to 100.62. Oil prices CLM7, -0.20%  inched up and gold prices GCM7, +0.23%  eased back slightly.

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