Wall St falls as Delta worries outweigh profits, M&A cheers

Aug 3 (Reuters) – Major Wall Street indices fell on Tuesday, as concerns over an increase in the Delta variant of the coronavirus shone a bullish corporate earnings season and a pickup in global trading activity.

Only four of 11 S&P indexes were higher at the start of the trading day, and the gains were led by real estate (.SPLRCR) and utilities (.SPLRCU), generally viewed as safe bets in times of heightened economic uncertainty.

A group of US companies including industrial materials maker Dupont (DD.N) and Discovery Inc (DISCA.O) posted better-than-expected quarterly results, but their shares fell as investors turned profits in a context of high stock market valuation. Read more

“The shares took into account a substantial increase in earnings, which is mainly due to an easy comparison to last year,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“What worries investors is the return of COVID-19 infections which could lead to a downturn in the economy and the possibility of a higher tax rate.”

Growing cases of the Delta variant and signs that the domestic economic recovery has started to slow have pushed all three major U.S. stock indexes to record highs, while extensive regulatory scrutiny in China has created nervousness in the industry global technology.

Chinese firm Tencent Holdings Ltd (0700.HK) lost as much as 10% in Asia after Chinese state media called online gambling “spiritual opium”. Read more

Shares of US-listed game companies including Activision Blizzard Inc (ATVI.O), Electronic Arts Inc (EA.O), Zinga Inc (ZNGA.O) and Take-Two Interactive Software Inc (TTWO.O) fell between 2.8% and 9%.

At 10:07 am ET, the Dow Jones Industrial Average (.DJI) was down 0.19%, the S&P 500 (.SPX) was down 0.18%, and the Nasdaq Composite (.IXIC) was down 0.42%.

Bond yields fell again after weaker-than-expected manufacturing data from the previous session sent them to their lowest level since July 20. Shares of major US banks, which typically track bond yields, fell about 1%.

Energy stocks (.SPNY) slipped 0.2% on falling oil prices.

Meanwhile, data on Tuesday showed factory orders rose 1.5% in June after rising 2.3% the month before. Economists polled by Reuters had forecast a 1% increase in June.

Later in the week, the focus will be on US service sector data and the monthly employment report for July.

In mergers and acquisitions, Translate Bio (TBIO.O) jumped 29.1% after France’s Sanofi (SASY.PA) agreed to buy the US biotech company in a deal to $ 3.2 billion. Read more

Under Armor Inc and Ralph Lauren Corp (RL.N) jumped 4.0% and 6.9%, respectively, after raising their annual revenue guidance. Read more

Overall, profits for S&P 500 companies are now estimated to have grown by around 90% in the second quarter compared to a 65.4% forecast in early July, according to IBES data from Refinitiv. Read more

Falling issues outnumbered the 1.84-to-1 advances on the NYSE and 2.56-to-1 on the Nasdaq.

The S&P Index recorded 35 new 52-week highs and three new lows, while the Nasdaq recorded 48 new highs and 52 new lows.

Reporting by Sagarika Jaisinghani and Shashank Nayar in Bengaluru; Editing by Arun Koyyur

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