Wall Street dials back from records despite good earnings

A trader talks on his phone on Wall St outside the New York Stock Exchange. PHOTO: REUTERS

NEW YORK (AFP) - Wall Street indices retreated from records on Tuesday (Jan 26), as traders took a pause despite major US companies reporting good earnings at the end of 2020.

Health care and industrial goods manufacturer 3M, which makes N95 face masks that protect against Covid-19, reported higher four-quarter profits and saw sales growing into this year.

Industrial behemoth General Electric also reported a profitable year and expected to continue the trend in 2021, a positive sign given that the company has been in turnaround mode following losses the prior three years.

But Wall Street's mind was elsewhere, as traders eyed ongoing negotiations in Washington on President Joe Biden's proposals for another stimulus package while mulling whether markets are teetering on the brink of a pullback.

The benchmark Dow Jones Industrial Average lost 0.1 per cent to close at 30,937.04, while the broad-based S&P 500 closed 0.2 percent lower at 3,849.62.

The tech-rich Nasdaq finished at 13,626.06 after losing 0.1 per cent. Both it and the S&P 500 had made records on Monday.

Wall Street has generally prospered amid the pandemic thanks to the Federal Reserve's extraordinary moves to pump liquidity into the economy and big federal stimulus measures that have helped consumers keep spending.

Biden wants to spend another US$1.9 trillion (S$2.5 trillion) to help the country's recovery from the pandemic, but Peter Cardillo of Spartan Capital Securities warned US indices may be set to decline no matter what.

"The market is already discounting everything. It's discounting the earnings season, it's discounting the possibility of another stimulus package and even an economic rebound," he said.

3M ended trading up 3.3 per cent following its healthy earnings. Shares of General Electric closed 2.7 per cent higher.

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