Wall Street Down 1% On Tech Earnings Anxieties and Rate Worries

Barry Adams
30 Jan, 2023
New York City

Stocks on Wall Street struggled and investors awaited rate decisions and prepared for a busy week of earnings. 

Apple Inc, Amazon.com Inc, Meta Platforms and Alphabet Inc are among 400 companies scheduled to release earnings. 

Monthly jobs report, consumer confidence data and activities in manufacturing and services sectors are scheduled to be released. 

In Europe, Philips announced to lay off 6,000 staff as the company reorganizes its operations after the boom and bust of Covid-19 related products. 

Electric vehicle makers brace for more price cuts after Ford followed the price cut announced by Tesla last month. 

Ford Motor Company cut as much as 9% list prices on select models of Mustang-E after Tesla Inc offered buyer incentives in the U.S.  

Investors also overlooked the latest covid-peak assessments from health regulators from China after independent local sources confirmed it is too soon to declare victory. 

Benchmark indexes traded volatile with a downward bias and bond yields inched higher on the expectations of a smaller rate hike this week in the U.S. and the Euro Area. 

The S&P 500 index declined 0.9% to  4,035.08 and the Nasdaq Composite index dropped 1.5% to 11,454.37. 

Crude oil decreased $1.42 to $78.25 a barrel and natural gas futures declined 15 cents to $2.65 a barrel. 

The yield on 2-year Treasury notes increased to 4.25%, 10-year Treasury notes inched up to 3.55%, 30-year Treasury notes to 3.66%. 

 

Europe Markets Struggled, Germany's Fourth Quarter GDP Decreased 

European markets closed mixed as investors braced for a busy week of corporate earnings and central bank policy meetings. 

Semiconductor maker ASML Holding NV declined 2.7% in Amsterdam trading after the company said it is awaiting the details of legislation focused on export controls to China in a statement released on Friday. 

Germany's real GDP decreased 0.2% on the quarter in the final three months of 2022 from the upwardly revised 0.5% in the third quarter. In 2022, real GDP increased 1.8%.

The DAX index fell 0.2% to 15,126.08, the CAC-40 index declined 0.2% to 7,082.01 and the FTSE 100 index rose 0.3% to 7,784.87. 

Brent crude fell $1.25 to $85.26 a barrel and the Dutch natural gas TTF  futures contract price inched up 2% to €56.55 per MWh. 

The yield on 10-year German Bunds rose to 2.28%, French bonds increased to 2.75%, UK Gilts to 3.35% and Italian bonds advanced to 4.28%.  

The euro increased to 1.089, the pound traded down to $1.238 and the Swiss franc inched higher to 92.32 U.S. cents. 

 

Japan-Holland-US Alliance In Focus In Tokyo and China Trading 

Asian markets lacked direction as investors awaited rate decisions and Chinese stocks closed mixed after a week-long holiday 

The Chinese State Council reiterated its commitment to boost spending and health authorities announced a sharp decline in daily death rate related to Convid-19. 

Investors were also cautious after the U.S., Japan and the Netherlands struck a deal to limit their exports of advanced semiconductor equipment to China. 

The details of the pact are still not clear, but the alliance of three countries are expected to finalize the details of legislation in the next six months. 

The restrictions are likely to include 28 nanometer ultraviolet lithography equipment used in the production of graphic chips, central processing units and high-speed networking chips, according to a research note prepared by Jeffries analyst Edison Lee.  

Deep ultraviolet equipment made by the Japanese companies Canon and Nikon Corp could also come into restrictions, forcing production cuts at the leading Chinese chipmakers China Semiconductor Manufacturing International Corp and Hua Hong and Shanghai Huali Microelectronics Corp and ChangXin Memory Technologies, Lee said in the note. 

Stocks in Japan closed higher after a volatile session. and semiconductor equipment stocks were in focus. 

The Nikkei index increased 0.2% to 27,433.40 and the yen inched lower to 130.18 against the U.S. dollar. 

Fanuc Corp increased 3.5% to ¥23,165.0 and Shin-Etsu Chemical 5% to ¥19,235.0 after the silicon wafer maker lifted its operating earnings outlook. 

 

Covid-19 Flare-up Worries Chinese Health Authorities 

Stocks in China closed mixed and about 300 million completed their holiday travel according to a statement by the ministry of tourism and culture. 

Markets are worried that Covid-19 infections are likely to flare-up in the coming weeks in rural China and death rates are expected rise in Sichuan, Hebei, Yunnan and Guangxi provinces.   

The Shanghai Composite index increased 0.1% to 3,269.32 and the Hang Seng index fell 2.7% to 22,069.73. 

The Kospi average in Seoul decreased 1.35% to close at 2,450.47 after five days of advance in a row following the weakness in auto and technology stocks. 

 

India Stocks React to Earnings 

Stocks rebounded after a holiday-shortened week of volatile trading and Adani Group stocks remained under pressure.  

Adani Enterprise is still looking to complete its secondary offering as early as this week and the Abu Dhabi, UAE controlled investment arm agreed to invest about $400 million. 

International Holding Company will make its second investment after the company invested $2 billion in three companies controlled by the group last year.

The Sensex index increased 0.3% or 158.81 points to 59,500.41 and the Nifty index added 0.3% or 44.60 points to 17,648.95. 

The rupee held firm near 81.47 against the U.S. dollar. 

After the close of regular trading hours, Larsen & Toubro said quarterly net income increased 24% and Bharat Petroleum Corporation said quarterly net declined 36%. 

Tech Mahindra said quarterly revenue topped $1 billion for the first time and revenue increased 19.9% but net income fell 5.3% from a year ago in the December quarter. 

Bajaj Finance jumped 4% after the financial services provider reported a surge in the December quarter earnings.