Investors React to Latest Earnings and Await GDP and Durable Goods Data

Barry Adams
24 Jan, 2023
New York City

Stocks faced selling pressure in morning trading after two days of gains and investors took profit in tech stocks. 

Investors also digested a fresh batch of earnings from Verizon, Johnson & Johnson and Lockheed Martin and await earnings from 300 more companies this week. 

On the economic front, investors are also looking to gain clues on the economy after the release of durable goods orders, fourth quarter GDP, new home sales and personal income and spending later in the week.

The S&P 500 index fell 3.11 points to 4,016.70 and the Nasdaq Composite index decreased 2.6 to 11,361.82. 

 

Energy Prices Lacked Direction 

Crude oil increased 14 cents to $81.73 a barrel and natural gas futures decreased 11 cents to $3.33 a thermal unit. 

 

Treasury Yield Hovered Near Recent Lows 

The yield on 2-year Treasury notes inched lower to 4.23%, 10-year Treasury notes hovered near 3.50% and 30-year Treasury bonds traded down to 3.67%. 

 

US Stock Movers 

Johnson & Johnson declined 1% to $166.71 after the healthcare company reported quarterly results that met investors expectations but the company's forward guidance was weaker-than-anticipated. 

Sales in the quarter declined 4.4% to $23.71 billion from $24.80 billion in the similar quarter last year, primarily because of lower Covid-19 vaccine sales and unfavorable exchange rate.  

Net earnings declined 25.9% to $3.52 billion or $1.33 per share from $4.74 billion or $1.77 per share in the quarter a year ago. 

US sales rose 2.9% to $12.52 billion and international sales dropped 11.5%  to $11.19 billion from last year.

The company  estimated adjusted earnings per share in a range of $10.45 to $10.65 and adjusted operating earnings per share in a range of $10.40 to $10.60. 

Verizon Communications Inc increased 80 cents to $39.75 after the company reported mixed quarterly results. 

Lockheed Martin Corp gained 1.4% or $5.98 after the defense contractor reported sales and adjusted earnings ahead of expectations. 

Raytheon Technologies Corp increased 1.8% or $1.69 to $97.92 after the defense contractor benefitted from arms sales for Ukraine and the company said it plans to reorganize in three business units. 

 

European Markets Pause On Rate Hike Worries

European markets were on the backfoot after aggressive rate hike worries returned following the release of business activities index. 

The S&P Global Composite Purchasing Managers' Index increased to 50.2 in January 2023 from 49.3 in December 2022 after falling for six months in a row. 

The rebound in service activities in pharmaceuticals, healthcare and technology and smaller contraction in manufacturing activities improved the index.   

The DAX index decreased 0.3% to 15,057.73,  the CAC-40 index traded up a fraction to 7,032.26 and the FTSE !00 index decreased 0.4% to 7,755.79. 

The U.S. dollar hovered near a 9-month low on the hopes that the Federal Reserve will moderate its aggressive rate hike posture and pivot to smaller rate increases at the meeting next week. 

The euro inched lower to $1.08, the British pound traded near $1.228 and the Swiss franc hovered near 92.63 U.S. cents. 

The yield on 10-year German Bunds increased to 2.20%, French bonds to 2.64%, the UK Gilts to 3.33% and Italian bonds to 3.997%. 

Natural gas prices fell for the second day in a row and dropped near a 16-month low as cold snap faded and warmer-than-usual temperatures are expected to return this week. 

Brent crude oil decreased 12 cents to $88.06 a barrel and the Dutch TTF natural gas dropped 9.7% to €59.60 per MWh. 

 

Tech Stocks Drive Nikkei Higher Second Day In a Row 

Benchmark index in Tokyo closed higher following a surge in tech stocks tracking gains in New York trading. 

The Nikkei index closed at 5-week high on the back of a rebound in tech stocks and investors awaited corporate earnings. 

The Nikkei 225 index increased 1.5% to 27,299.19 and the yen firmed 18 cents to 130.48 against the U.S. dollar. 

GS Yuasa Corp increased 3.8% to ¥2,255.0 after the company announced  a joint venture with Honda Motor Corp to make advanced Lithium-Ion batteries. 

Honda Motor Corp increased 1.2% to ¥3,129.0. 

Most markets in the region were closed to celebrate the Lunar New Year. 

Markets in mainland China, Hong Kong, Taiwan, Singapore, Malaysia and South Korea were closed. 

 

India Awaits Union Budget Measures 

Indian stocks lacked direction ahead of the Republic day holiday on Thursday and investors reacted to latest earnings from vehicles makers Maruti Suzuki and TVS Motor. 

Investors are also awaiting the central government budget next week and looking for clues on incentives to accelerate the manufacturing sector and infrastructure spending. 

The Sensex index increased 0.06% or 37.08 to 60,978.75 and the Nifty index traded down 0.25 points to 18,118.30.

The rupee closed down 11 paisa to 81.59 against the U.S. dollar. 

Maruti Suzuki said revenue in the December quarter increased 27% to ₹29,905 crore and net income rose 66.4% to ₹2,135 crore and diluted earnings per share jumped to ₹77.84 from ₹33.48 a year ago.

TVS Motor said the December quarter revenue increased 15% to ₹6,076 crore and net income increased to ₹352 crore from ₹288 crore and diluted earnings per share rose to ₹7.42 from ₹6.07 a year ago.