Dow Struggles for Direction as Earnings Season Heats Up

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Investing.com – The Dow struggled for direction Tuesday as investors took a breather on bidding up the market amid a swath of quarterly reports and an update on monetary policy due Wednesday as the Federal Reserve kicked off its two-day meeting.

The Dow Jones Industrial Average rose 0.07%, or 22 points, though had been up 160 points intraday. The S&P 500 was up 0.01%, while the Nasdaq Composite gained 0.13%.

A slew of companies reported in what is set to be the busiest week of earnings, with Johnson & Johnson (NYSE:JNJ), 3M and Verizon (NYSE:VZ) among the notable names that had better than expected quarterly results.

Johnson & Johnson delivered a beat on the top and bottom lines and said it expected its vaccine data from its phase 3 trial to be released “soon.” Its shares were up more than 2%.

General Electric (NYSE:GE), meanwhile, reported better-than-expected free cash flow, sending its shares up more than 4%. The conglomerate also reported quarterly earnings that just missed expectations, while revenue beat.

The focus on earnings in likely to intensify in the coming days as Apple (NASDAQ:AAPL), Tesla (NASDAQ:TSLA) , Boeing (NYSE:BA), Facebook Inc (NASDAQ:FB), AT&T (NYSE:T), which combined make up about 12% of the S&P 500, are all set release quarterly reports. Microsoft (NASDAQ:MSFT), meanwhile, will report fourth-quarter results after the closing bell on Tuesday.

On the economic front, there are signs that stimulus package – agreed last month — is having the desired impact, as consumer confidence bounced back.

The consumer confidence index rose to 89.3 in January from an upwardly revised 87.1 in December, slightly topping expectations of 89.0.

Investor focus also shifted toward monetary policy, with the Fed expected to leave its benchmark rate and pace of bond purchases unchanged, though is largely expected to deliver a somewhat balanced outlook on the economy.

“The tone of the Fed is largely expected to remain balanced; while the economic data has deteriorated since December’s meeting  … the vaccine process is well underway and $900 billion of stimulus is being distributed with the prospect of potentially trillions more in aid,” Stifel said.

The Federal Reserve has forecasts keeping rates on hold through 2023, and has repeatedly shrugged off the idea of tapering its bond purchases even if post-Covid pent-up demand, as is widely expected, leads to a faster pace of inflation.

In other news, Beyond Meat (NASDAQ:BYND) rose 17% as the teamed up with Pepsi to jointly develop plant-based snacks and drinks.

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