After pushing into the highs of last week, the Dow Jones Industrial Average closed lower on Tuesday and is setting up for a lower open on Wednesday as is the S&P 500 while the Nasdaq is looking slightly positive. Concerns are building over a trend of revenue-misses in quarterly earnings. Revenues from blue-chip companies including Dow components Travellers, DuPont (NYSE:DD) and IBM (NYSE:IBM) were all a cause for concern.
Healthcare stocks were outperformers on news that Teva Pharma Industries Ltd (ARCA:TEVA) made an offer for generic drug company rival Mylan Inc (NASDAQ:MYL) valued at over $40bn. Mylan has already made an offer to smaller rival Perrigo Co (NYSE:PRGO) so chances are that negotiations will become quite drawn out. Healthcare could get another boost on Wednesday led by biotech giant Amgen (NASDAQ:AMGN) which is expected to open higher after beating top and bottom line estimates and raising its full year guidance.
Shares of Pizza Hut and KFC-owner, Yum Brands are expected to open higher on optimism that the meat-scare has not hit sales as badly as expected in China, the company beat profit expectations.
Since the tech sector has become such a dominant source of profit growth, the next few days which include earnings from Facebook (NASDAQ:FB), Google (NASDAQ:GOOGL), Apple (NASDAQ:AAPL) and Twitter (NYSE:TWTR) are an especially sensitive part of the earnings season. Yahoo! (NASDAQ:YHOO) hasn’t got things off to the best of starts by missing profit estimates; however shares are not expected to be too heavily punished on optimism over the recently renegotiated deal with Microsoft Corporation (NASDAQ:MSFT) over search.
Oil prices dropped sharply on Tuesday following a surprisingly strong inventory build reported by the American Petroleum Institute and the end of Saudi Arabia’s bombing campaign in Yemen. Whether oil can continues its recovery and build on its new 2015 highs will likely depend on the International Energy Agency’s own crude inventories data on Wednesday.
Boeing (NYSE:BA), Coca-Cola Company (NYSE:KO) and McDonald`s Corporation (NYSE:MCD) report quarterly earnings before the open on Wednesday, while Facebook, eBay, AT&T, Qualcomm (NASDAQ:QCOM) and Texas Instruments Incorporated (NASDAQ:TXN) report after the closing bell.
Futures suggest the:
S&P 500 will open 6 points lower at 2,091 with the
Dow Jones expected to open 61 points lower at 17,888 and the
Nasdaq 100 1 point higher at 4,418.
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