Stocks closed lower Tuesday as market participants took in a lackluster start to earnings season and looked ahead to Wednesday's key inflation update. A steep sell-off in several semiconductor stocks didn't help, with reports that China's CXMT is making progress on its memory chip designs putting pressure on this corner of the market.
At the close, the blue-chip Dow Jones Industrial Average was down 0.4% at 51,670 and the broader S&P 500 was 0.02% lower at 7,805. The tech-heavy Nasdaq Composite, meanwhile, shed 0.2% to 27,204 as mega-cap memory stocks, including SK Hynix (SKHY, -3.2%) and Micron Technology (MU, -3.6%), slumped.
Johnson & Johnson (JNJ) was the worst Dow Jones stock today, falling 5.7% after the drugmaker reported earnings. JNJ beat top- and bottom-line estimates for its third quarter, but sales in its medical devices division fell short of Wall Street's expectations due to the ongoing conflict in the Middle East.
There are "countries that still value and actually want premium healthcare systems, think Kuwait, UAE, Saudi Arabia," J&J Chief Financial Officer Joe Wolk told CNBC. "They pride themselves on having solid healthcare, very good healthcare. But their budgets now are being resourced and allocated towards defense."
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JPMorgan reports a double miss
Elsewhere on the earnings calendar, JPMorgan Chase (JPM, -0.9%) reported second-quarter earnings of $5.75 per share, up 13.4% year over year but below analysts' estimates. JPM's revenue of $50.2 billion also fell short of expectations.
"JPMorgan had a rare miss against expectations," says David Wagner, head of equity and portfolio manager at Aptus Capital Advisors. "Dimon called it another quarter of strong results, but gave few clues on the shortfall, which was partly securities losses, and he said the bank cut back on share repurchases in the quarter. The franchise still looks healthy, but the quality of the quarter was a step below what investors have come to expect."
Among the other big banks reporting, Wells Fargo (WFC, -3.1%) fell short on revenue, while Goldman Sachs (GS, -0.2%) and Citigroup (C, -5.6%) beat on both the top and bottom lines.
Bumble goes private in $1.3 billion deal
Bumble (BMBL) surged 56.6% today and is up 134% this week on news the dating app will be taken private by Ithaca Holdings in an all-cash deal valued at $1.3 billion.
The female-founded platform, which prioritized user safety, went public in 2021 and closed its first day with a market cap of $7.7 billion. It has been a downhill slide since then, with BMBL stock's current market value closer to $783 million.
"Bumble was founded on a simple belief: meaningful relationships are essential to a healthy, happy life. Today, that belief feels more important than ever," said Whitney Wolfe Herd, Bumble's founder and CEO, in the press release. "In Ithaca, we have found a partner who shares our vision, believes in our women-first mission, and is committed to investing in Bumble's future."
Inflation data is on deck
Earnings will remain in focus on Wednesday, with Bank of America (BAC, -1.1%) and Morgan Stanley (MS, -1.8%) among those reporting. But most of Wall Street's attention will be on the release of the September Consumer Price Index (CPI) report.
"The September CPI could determine whether the Fed's next hike is imminent, or simply still ahead," explain UBS Global Research economists. "An upside surprise, particularly in the core, could revive the October debate, both moving market pricing and influencing the decision itself," while a print closer to forecasts "would leave the Committee with room to wait."
According to CME Group FedWatch, futures traders are currently pricing in a 78% probability that the Federal Reserve keeps interest rates unchanged when it meets later this month. Odds for a December rate hike are at 70%.