U.S. Stocks Trade Little Changed

By Saumya Vaishampayan And Corrie Driebusch 

U.S. stocks were little changed Tuesday, on the heels of declines in Europe and China, as investors continued to focus on corporate earnings.

The Dow Jones Industrial Average added 17 points, or 0.1%, to 18051 and the S&P 500 declined two points, or 0.1%, to 2107. The Nasdaq Composite lost 12 points, or 0.2%, to 5048.

The moves followed losses in Europe, where France's CAC 40 fell 2% and Germany's DAX dropped 1.7%.

Stocks in China fell sharply after the country's securities regulator issued another warning to investors on the market's risks. The Shanghai Composite Index fell 1.1%. After markets closed, The Wall Street Journal reported that China's central bank is planning to launch fresh easing measures targeting the country's mounting local-government debt problems.

Earnings reports were in focus for investors. On Tuesday, 41 companies in the S&P 500, more than 8% of the index, report quarterly results.

Including results from 233 companies in the S&P 500, first-quarter earnings are on track to fall 1.8% from a year earlier. Earnings had been expected to decline 4.6% going into the reporting season, pressured by a strong dollar and weak oil prices.

"We've seen how much the dollar has rallied and it has been widely discussed," said Jack Caffrey, equity portfolio manager at J.P. Morgan Private Bank. "The fact that the strong dollar is impacting results...is becoming a little less of a shock," he added.

Instead, he said he's more focused on the outlook for margins and how they will be affected by an eventual pickup in wage growth. A decline in margins by itself doesn't cloud the outlook for corporate profits, he said.

"To the extent that we may wind up with some labor cost pressure, that's ultimately more money in the pocket of the consumer," he said. That could boost consumer spending and lead to higher revenue growth, he added.

The Federal Reserve's two-day policy meeting begins Tuesday. While there is no news conference scheduled following the meeting and economists do not expect major changes to the policy statement, some traders said there are fewer buyers of stocks heading into the meeting. Traders will be parsing over the policy statement, which will be released on Wednesday, for any mentions of a stronger U.S. dollar and global growth.

In earnings news Tuesday, Merck & Co. raised its earnings guidance for the year as its first-quarter results declined less than expected. Shares rose 5.3%, adding 20 points to the Dow.

Aetna Inc. boosted its profit outlook for 2015 again on Tuesday as the health insurer reported better-than-expected earnings in the latest quarter. Shares added 2.9%.

Apple Inc. said Monday it sold 61.2 million iPhones in the three months ended March 28, up 40% from the year-ago period. Strong iPhone demand boosted Apple's profit, which increased 33% to $13.57 billion in its fiscal second quarter. Still, shares fell 1.4%, making it the worst performing stock in the Dow.

Ford Motor Co. said net income declined 7% in the first quarter as profitability in North America and Asia was offset by losses in Europe and South America. Shares rose 0.7% premarket.

In commodity markets, gold futures inched up 0.1% to $1204.90 an ounce. Crude-oil futures were little changed at $56.97 a barrel.

Write to Saumya Vaishampayan at [e-mail] and Corrie Driebusch at [e-mail]

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