Mixed Earnings Evaporate Previous Day's Gains On Wall Street

Barry Adams
08 Feb, 2023
New York City

Stocks turned lower and investors returned focus to corporate earnings. 

Benchmark indexes shot up in volatile trading in Tuesday's trading after Fed Chairman Jerome Powell acknowledged cooling of inflation but also reiterated central bank's commitment in lifting rates to restrictive levels. 

Market jitters were in full display as investors reacted to corporate earnings and investors remained divided about the future direction and levels of interest rates. 

The S&P 500 index decreased 0.2% to 4,153.16 and the S&P 500 index fell 0.3% to 12,077.67. 

Crude oil increased 59 cents to $77.70 a barrel and natural gas fell 4 cents to $2.53 a thermal unit. 

The yield on 2-year Treasury notes increased to 4.48%, 10-year Treasury notes inched higher to 3.69% and 30-year Treasury bonds rose to 3.74%. 

 

Mortgage Applications Volume Rebound

Mortgage applications increased 7.4% in the week ending on February 3, according to the latest Mortgage Bankers Association’s weekly mortgage applications survey.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.4% on a seasonally adjusted basis and rose 8% on an unadjusted basis.  

The Refinance Index increased 18 % from the previous week but plunged 75% from the previous year. 

“Applications rose last week as the 30-year fixed mortgage rate inched lower to 6.18%, its fifth consecutive weekly decline. 

The 30-year fixed rate is almost a percentage point below its recent high of 7.16% in October 2022,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.

 

U.S. Movers 

Chipotle Mexican Grill, Inc declined 4.2% to $1,650 after the company reported lower-than-expected growth in same store sales, earnings and revenue.   

Comparable store sales rose 5.6% and in-restaurant sales rose 17.5% and digital sales were 37.4% of food and beverage revenue. Opened 100 new restaurants with 90 locations including a Chipotlane.

Chipotle Mexican Grill said revenue in the fourth quarter rose 11.2% to $2.2 billion and net income jumped to $223.7 million from $133.5 million and diluted EPS rose to $8.02 from $4.69 a year ago.

Uber Technologies Inc rose 7.2% to $37.45 after the digital ride-hailing service provider forecasted gross booking to accelerate in the first quarter.  

Uber said revenue in the fourth quarter rose 49% to $8.6 billion and net income fell 33% to $595 million from $892 million and diluted EPS declined to 29 cents from 44 cents a year ago.

 

European Markets Shift Focus to Earnings 

European markets rebounded and the euro held stable after Fed Chair Jerome Powell sounded less hawkish in recent comments on Tuesday. 

The DAX index increased 0.8% to 15,446.28, the CAC-40 index rose 0.2% to 7,145.44 and the FTSE 100 index added 0.5% to 7,906.91. 

Societe Generale SA declined 4.7% to €26.71 after the French bank said net income in the fourth quarter declined 35.1% to Є1.16 billion from Є1.79 billion in the previous year. 

TotalEnergies SE declined 1.2% to €56.83 after the French energy giant said earnings in the fourth quarter dropped 44% to $3.3 billion. 

The euro inched lower to $1.072, the British pound edged down to $1.205 and the Swiss franc traded near 92.12 U.S. cents. 

Brent crude oil rose 28 cents to $83.97 a barrel and the Dutch TTF Spot Price decreased 3.4% to 53.50 per MWh. 

 

Japan's Current Account Surplus Halves 

Asian markets closed mixed amid rising tensions between the U.S. and China. 

The Nikkei 225 index declined 0.3% to 27,606.46 and the yen weakened 30 cents to 130.35 against the U.S. dollar. 

Japan's current account surplus was cut in half after soaring costs of energy imports overwhelmed the return on foreign investments held by Japanese corporations, the Finance Ministry said Wednesday. 

Current account surplus in 2022 declined by ¥10.15 trillion to ¥11.44 trillion or $87 billion. 

Japan’s trade deficit was ¥15.78 trillion after imports soared 42% to ¥114.47 trillion, faster than the 19.9% rise in exports to ¥98.69 trillion, according to the preliminary data from the ministry. 

 

China-U.S. Tensions Remain Elevated 

China market indexes closed down on the worries that the escalating tensions with the U.S. may overshadow trade flows between two nations. 

China refused the U.S. request to schedule a conference call between defense chiefs and the U.S. Senate Democratic leader Chuck Schumer described the state of bilateral relations "tense." 

Schumer added that the Biden administration is looking for additional measures after shooting down the alleged Chinese spy balloon.  

The Shanghai Composite index declined 0.5% to 3,232.11 and the Hang Seng index edged lower 15.18 points to 21,283.52. 

The Chinese yuan strengthened to 6.79 against the U.S. dollar. 

 

Reserve Bank of India Hikes Rates 

The Reserve Bank of India raised its key repo rate by 25 basis points to 6.5% as widely expected, the sixth rate hike in a row. 

The central bank has raised rates by 250 basis points since May 2022 and lifted the rate to the levels not seen since January 2019. 

The Sensex index increased 0.6% or 377.75 points to 60,663.79 and the Nifty index added 0.9% or 150.25 points to  17,871.70. 

The Indian rupee edged lower to 82.62 against the U.S. dollar.