Stocks slide as traders digest $30B rail offer, earnings

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U.S. stock futures were lower Tuesday as investors assessed a mega-deal in the rail industry and sifted through a slew of earnings reports. 

Dow Jones Industrial Average futures were lower by 138 points, or 0.41%, while S&P 500 futures and Nasdaq futures were weaker by 0.35% and 0.25%, respectively. 

In stocks, Canadian National Railway offered $30 billion for Kansas City Southern, a 21% premium to an agreement reached last month with Canadian Pacific Railway Ltd. The offer, if accepted, will pay Kansas City Southern shareholders $325, including $200 a share in cash and 1.059 Canadian National shares for each Kansas City Southern share they own.

THE RECORD STOCK MARKET IS SHOWING SIGNS OF CRACKING

In earnings, Dow component Johnson & Johnson reported $100 million in sales from its single-shot COVID-19 vaccine that was last week put on hold by the U.S. Food and Drug Administration due to blood clotting concerns. Both earnings and revenue topped Wall Street estimates. 

Fellow Dow member Proctor & Gamble Co. beat on both the top and bottom lines amid strong demand for its cleaning products. The company plans to raise prices by mid-to-high single-digit percentages for some products beginning in September.

Rounding out Dow earnings, International Business Machine Corp. topped estimates as its cloud-computing unit fueled the strongest quarterly sales growth in over two years and insurer Travelers Companies Inc. exceeded expectations despite winter storms causing casualty losses to more than double from a year ago. 

Elsewhere, United Airlines Holdings Inc. posted a larger-than-expected adjusted net loss of $2.4 billion as the company grappled with higher jet fuel prices and reduced demand caused by COVID-19. The airline expects EBITDA to turn positive later this year despite international travel demand remaining 70% below 2019 levels. 

Netflix Inc. will report its quarterly results after the closing bell. 

In commodities, West Texas Intermediate crude oil rose 38 cents to $63.76 per barrel and gold ticked up 40 cents to $1,771 an ounce.   

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Overseas markets were mostly lower. 

France’s CAC 40 paced the decline in Europe, trading down 1.51%, while Britain’s FTSE 100 and Germany’s DAX 30 were weaker by 1.16% and 0.9%, respectively. 

In Asia, Japan’s Nikkei 225 plunged 1.97%, China’s Shanghai Composite index slipped 0.13% and Hong Kong’s Hang Seng index ticked up 0.1%. 

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