Dow Trades Flat After Johnson & Johnson Quarterly Beat

Stocks are off session lows by mid-morning Tuesday with the Dow Jones Industrial Average trying for gains after a rush of key earnings.
By Keris Alison Lahiff ,

Stocks were off session lows by mid-morning Tuesday with the Dow Jones Industrial Average trying for gains after a rush of key earnings.

The S&P 500 was down 0.23%, the Dow was flat, and the Nasdaq slid 0.3%.

The S&P 500 and Dow rose to new records with only slight effort on Monday as a rally in tech helped to offset weakness in oil and political uncertainty in Turkey. The Dow eked out a new closing high of 18,533.05, mere points above its previous Friday record, while the S&P 500 scored a new high of 2,166.89.

Johnson & Johnson (JNJ) - Get Report  was the best performer on the Dow, rising 1.3%, after topping estimates in its second quarter and raising its full-year forecasts. A new line of pharmaceutical products helped to boost growth, overshadowing a slide in sales in its consumer health business. The company earned an adjusted $1.74 a share, 6 cents above analysts' estimates, while revenue climbed nearly 4% to $18.48 billion. Its 2016 earnings guidance was increased to $6.63 to $6.73 a share from $6.53 to $6.68 billion.

Netflix (NFLX) - Get Report fell 14% after falling short of analysts' estimates for subscriber numbers, a closely watched metric. The streaming service added 1.7 million international subscribers in its recent quarter, below its own forecast of 2.5 million. Earnings came in above estimates, though. Netflix earned 9 cents a share, three times consensus.

Yahoo! (YHOO) also reported a disappointing quarter. The Internet company reported its second-quarter loss widened to $440 million, while adjusted revenue, which excluded commissions paid for Web traffic, tumbled nearly 20%. Yahoo! made no mention of the possible sale of its core businesses, though Monday marked the final day for offers. The stock fell 0.2%.

IBM (IBM) - Get Report climbed after beating expectations in its second quarter. The tech giant earned an adjusted $2.95 a share, 6 cents more than forecast, while revenue fell 2.8% to $20.24 billion. The company is still struggling with growth, reporting its 17th straight quarter of declining sales.

Goldman Sachs (GS) - Get Report was slightly lower despite a better-than-expected second quarter. The financial institution earned $3.72 a share over the quarter compared to an expected $3.04. Revenue of $7.93 billion was 12% lower than a year earlier, though exceeded estimates of $7.48 billion. Shares fell 0.8% in early trading Tuesday.

VMware (VMW) - Get Report also reported a better-than-expected second quarter. The cloud-software developer earned an adjusted 97 cents a share, 2 cents higher than expected, while revenue of $1.69 billion exceeded estimates of $1.68 billion.

Aerospace and military manufacturer Lockheed Martin (LMT) - Get Report exceeded estimates on its top- and bottom-lines. The company earned $3.32 a share, well above expectations of $2.94 a share. Revenue of $12.9 billion beat by $300 million.

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Unitedhealth (UNH) - Get Report   raised the low-end of its previous earnings guidance for the full year thanks to a solid June quarter. The health company increased its low-end earnings target by a nickel to $7.80 a share. Optum, its services unit, propelled earnings and revenue higher over its quarter, contributing around 44% to overall sales.

Monsanto (MON) rebuffed a sweetened offer from Bayer (BAYRY) - Get Report on Tuesday, though said it was open to further discussions with the chemical company and others interested in M&A talk. Bayer had raised its offer to $125 a share from $122 a share last Thursday in an all-cash bid.

Housing starts in June climbed, the Commerce Department said on Tuesday, driven by a high level of demand and tight inventory. Starts for newly constructed homes rose 4.8% last month to an adjusted annual pace of 1.19 million. Economists had expected a pace of 1.17 million. May's numbers were revised down to 1.14 million from 1.16 million. Housing permits increased 1.5% to 1.15 million.

"The overall tone of this report was encouraging, pointing to further upside momentum in U.S. housing market activity," said Millan Mulraine, deputy chief U.S. macro strategist at TD Securities. "The buoyancy in both construction activity and building intentions speaks to the renewed level of confidence among U.S. homebuilders about the outlook for this sector, and we continue to expect the recovery in this segment of the US economy to remain on track in the coming months."

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