NEW YORK — Investors grew cautious Tuesday after quarterly sales at Johnson & Johnson fell short of expectations, and an influential analyst stirred worries that bank shares are overheated.
Most stocks posted modest losses, a day after major indexes finished at their best levels in a year. The Dow Jones industrial average slipped 15 points, though the Nasdaq composite edged higher.
Stocks could get a bounce today from Intel, which posted earnings and sales after the closing bell that topped expectations. The leading chipmaker also said business is improving. The stock rose 4 percent in after-hours trading.
The market could also get a lift from comments by CSX chief executive Michael J. Ward, who said the worst of the recession “is likely behind us” as the major rail operator reported quarterly results after the bell.
Still looming ahead is the first earnings report, early today, from a major bank, JPMorgan Chase.
J&J was the first in a series of big companies to report quarterly results this week, and a 5 percent drop in sales at the maker of health care products fanned concerns that companies have had to rely on cost-cutting to boost profits, as they did in the first half of the year. Investors are worried that earnings will suffer if sales don’t improve.
The market’s unease intensified after banking analyst Meredith Whitney lowered her rating on Goldman Sachs to “neutral” from “buy.” Goldman’s stock had risen 34 percent since Whitney upgraded the stock to “buy” in mid-July. The bank reports results Thursday.
Health care stocks stumbled after J&J’s report and as the Senate Finance committee approved a version of the health care overhaul bill.
Earnings reports are likely to continue to shape the market’s sentiment for the rest of this week.
“The market only makes sense at these levels if earnings can grow at a decent pace,” said Jerry Webman, chief economist at Oppen heimer Funds. “What we’re hearing now is OK, but you don’t get long-term earnings growth out of cost-cutting.”
The Dow fell 14.74, or 0.2 percent, to 9,871.06. On Monday, it came within 69 points of the psychological barrier of 10,000, a level not seen in a year.
The Standard & Poor’s 500 fell 3.00, or 0.3 percent, to 1,073.19, its first loss after six days of gains. The Nasdaq rose 0.75, or less than 0.1 percent, to 2,139.89.
Linda Duessel, equity market strategist at Federated Investors, said stocks could drift after the strong rally.
“I don’t know if we have to pull back so much as take a break,” she said.
