Stocks struggled to retain gains from earlier in the day as Wall Street pored through the latest batch of corporate earnings.
The Dow Jones Industrial Average dipped 47 points, while the S&P 500 dipped 0.1%. The Nasdaq Composite traded 0.1% lower.
IBM reported better-than-expected earnings, but its stock fell 5.5% as its revenue fell for a third straight quarter. Netflix also fell 1.6% as its guidance for second-quarter earnings disappointed investors.
Meanwhile, Morgan Stanley shares rose 1.3% after posting earnings and revenue that topped expectations. The banking giant’s results were boosted by sales in its wealth management and fixed income trading divisions.
PepsiCo also reported stronger-than-forecast earnings as sales in its Frito-Lay business grew by 5.5%. The stock rose 2.7%. Rail transportation giant CSX, meanwhile, saw its stock rise more than 5% on the back of its quarterly results.
Overall, 84.6% of the S&P 500 companies that have reported calendar first-quarter earnings have topped analyst expectations, according to FactSet. This was a highly anticipated earnings season as analysts polled by FactSet expected corporate earnings to have fallen by 4.2% in the first quarter.
“Earnings growth was destined to slow in 2019, if for no other reason that tax cuts in 2018 made year/year comparisons tougher,” Ed Clissold, chief U.S. strategist at Ned Davis Research, said in a note. But “the odds of a 2015-type earnings decline appear low, making the risk of earnings causing a major market dislocation over the intermediate-term low.”
Health care fell more than 1.7% as a sector, adding to its steep losses from the previous session. The sector fell 2% on Tuesday, its biggest one-day decline since Jan. 3.
“Health care is one of the poorest performers this year,” said Ernie Cecilia, CIO at Bryn Mawr Trust. “Some of it is political. The prospects from a regulatory perspective, certainly in managed care and some of the large pharmaceutical companies, is a question mark.”
Stocks initially rose on Wednesday following strong economic data out of China. The Chinese economy grew by 6.4% in the first quarter of 2019, topping a Refinitiv estimate of 6.3%. Industrial production also surged 8.5% in March, surging past a 5.9% forecast.
The strong Chinese economic numbers assuaged fears that the global economy was slowing down. The data also pushed Citi to raise its 2019 GDP estimate to 6.6%.
“Our new baseline scenario is that a framework trade deal between the US and China will be reached in 2Q and it will lift most, if not all, existing punitive tariffs,” Citi economist Xiangrong Yu wrote. “Second, we see improved policy effectiveness in boosting domestic demand. The gov’t’s repeated messages to support private entrepreneurship and carry on market-oriented reforms have greatly reduced the policy uncertainty in China.”
Qualcomm, meanwhile, rallied 13% — adding to a sharp rise in the previous session — as investors continued to cheer the chipmaker settling a lawsuit with tech giant Apple.
Qualcomm’s rally lifted the broader chipmaker space. The VanEck Vectors Semiconducto ETF (SMH) climbed more than 2%.
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