Stock rally takes breather ahead of Starbucks, Google earnings

U.S. equity markets ended the session lower, giving up earlier gains as earnings season kicked into high gear and the Federal Reserve started a two-day policy meeting.

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The Nasdaq Composite led the selling falling 1.4 percent while the S&P 500 lost 0.52 percent and the Dow Jones Industrial Average ended fractionally lower.

On a point basis, the Dow ended down 33 points giving up gains of more than 378 points.

Earnings results from Google, Starbucks and Ford will be closely watched after the bell on Tuesday.

During the session investors took in earnings from four Dow components – 3M, Caterpillar, Merck and Pfizer.

3M beat on both the top and bottom lines as strong demand for N95 respirator masks boosted results in the company’s personal safety unit.

Heavy-equipment maker Caterpillar reported sales slumped 21 percent from a year ago amid weak demand from miners and construction companies.

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Drugmaker Merck reported better-than-expected earnings and revenue as sales of cancer drug Keytruda lifted results. The company lowered its 2020 profit forecast because social-distancing measures are likely to reduce trips to doctors’ offices, where 66 percent of sales are made through the administration of drugs.

Rival drugmaker Pfizer beat on profit and sales and reaffirmed its full-year revenue forecast. The company expects to begin human trials for a potential coronavirus treatment by the end of this month.

Elsewhere on the earnings front, Southwest Airlines posted a $94 million first-quarter loss and warned that business would remain weak through at least May. The airline could not provide any more clarity on business going forward.

Harley-Davidson said profit plunged 46 percent from a year ago to $69.7 million as COVID-19 choked sales. The motorcycle-maker took a series of steps to save cash, including slashing its dividend to 2 cents a share from 38 cents and announced the development of a new strategic plan.

Meanwhile, Bed Bath & Beyond shares surged for a second day after the company late Friday reported digital sales spiked 85 percent from a year ago.

79511cff-NYSE Closes Trading Floor, Moves To Fully Electronic Trading Amid Coronavirus Pandemic

Traders work on the floor of the New York Stock Exchange (NYSE) on March 20, 2020 in New York City. (Photo by Spencer Platt/Getty Images)

Looking at commodities, West Texas Intermediate crude oil fell 3.44 percent to $12.34 a barrel, while gold slipped 0.08 percent to $1,711 an ounce.

U.S. Treasurys rallied as members of the central bank's Federal Open Market Committee begun a discussion on monetary policy. The yield on the 10-year note was down 3.3 basis points at 0.621 percent.

In Europe, Germany’s DAX gained 1.27 percent, Britain’s FTSE added 1.91 percent and France’s CAC climbed 1.43 percent.

Asian markets were mixed, with Hong Kong’s Hang Seng adding 1.22 percent while Japan’s Nikkei and China’s Shanghai Composite fell 0.06 percent and 0.19 percent, respectively.

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