(Reuters) – The S&P 500 and Dow crept higher on Tuesday as investors held out for more U.S. government stimulus, but strained Sino-U.S. relations over TikTok and disappointing quarterly earnings from Ralph Lauren and AIG curbed gains.
FILE PHOTO: A trader adjusts his mask as he works on the floor of the New York Stock Exchange as the outbreak of the coronavirus disease (COVID-19) continues in the Manhattan borough of New York, U.S., May 28, 2020. REUTERS/Lucas Jackson
Ralph Lauren Corp (RL.N) slumped 6.5% to its lowest since mid-May after quarterly revenue plunged by nearly $1 billion due to coronavirus-led store closures and a slowdown in global demand for luxury goods.
American International Group Inc (AIG.N) also led the declines on the S&P 500 with a 8.2% drop as its quarterly adjusted profit slumped.
Reflecting the cautious mood, defensive stocks including real estate .SPLRCR, utilities .SPLRCU and consumer staples .SPLRCS led gains among the major S&P sectors. Energy .SPNY shone among the growth-linked cyclical sectors.
All eyes are now on a fifth major coronavirus-aid bill, with Senate Democratic Leader Chuck Schumer saying talks with the White House were moving in the “right direction”.
“A good portion of the stimulus and any likely improvement in fundamentals has been priced in and we are seeing that in stretched valuations,” said Talley Leger, senior investment strategist at Invesco in New York City.
“U.S. equities in general are one of the most overvalued markets in the developed world, centered on technology.”
Meanwhile, with Microsoft Corp (MSFT.O) looking to buy short-video app TikTok’s U.S. operations, Trump said on Monday the U.S. government should get a “substantial portion” of any deal price.
On Tuesday, state-backed newspaper China Daily said the country will not accept the “theft” of the technology company.
Microsoft’s shares fell 2.1%.
At 12:38 p.m. ET, the Dow Jones Industrial Average .DJI was up 99.11 points, or 0.37%, at 26,763.51, the S&P 500 .SPX was up 3.41 points, or 0.10%, at 3,298.02. The Nasdaq Composite .IXIC was down 6.06 points, or 0.06%, at 10,896.74.
Evergy Inc (EVRG.N) slumped 11% after two sources said the board of the Midwest utility planed to remain independent as bids solicited from prospective merger partners did not offer sufficient value.
Take-Two Interactive Software Inc (TTWO.O) rose 4.9% as it raised its annual adjusted sales forecast on demand for its videogame franchises “Grand Theft Auto” and “NBA 2K”.
Rival Activision Blizzard Inc (ATVI.O) gained 1.4% ahead of its results due after the closing bell.
About 83% of the 352 companies in the S&P 500 that have reported quarterly results so far have beaten estimates for earnings, according to IBES Refinitiv data.
Advancing issues outnumbered decliners by a 1.61-to-1 ratio on the NYSE and by a 1.10-to-1 ratio on the Nasdaq.
The S&P index recorded 22 new 52-week highs and no new low, while the Nasdaq recorded 107 new highs and eight new lows.
Reporting by Sagarika Jaisinghani and Medha Singh in Bengaluru; editing by Uttaresh.V