Market Updates

U.S. Averages Hover Near Record Highs, Earnings Season Gathers Momentum

Barry Adams
29 Jan, 2024
New York City

    U.S. stocks traded slightly higher in Monday's session ahead of the Federal Reserve's policy announcement and a flood of earnings from mega-cap companies.

    The S&P 500 index and the Nasdaq Composite edged higher and extended the previous week's gains.

    The resilient U.S. economy and strong but not-too-hot labor market conditions are giving more room to the Federal Reserve to cool inflation to its 2% targe rate.

    Last week, economic updates showed that the U.S. economy accelerated its growth in 2023, despite widespread predictions of an imminent slowdown at the beginning of the year.

    The U.S. GDP expanded at a faster pace of 2.5% from 1.9% in the previous year, powered by sustained consumer spending.

    Moreover, new home sales rose in December and advanced in 2023, despite elevated home prices and rising interest rates.

    Investors are widely anticipating the Federal Reserve holding its key lending rates at the end of its two-day meeting on Wednesday.

    Moreover, investors are looking forward to the release of non-farm payrolls and JOLT reports this week.

    On the earnings front, about 800 companies are expected to release earnings this week.

    Earnings season enters its third week, and Microsoft, Alphabet, Apple, AMD, MasterCard, and ExxonMobil are among the leading companies scheduled to release earnings in the U.S.

     

    U.S. Indexes and Yields

    The S&P 500 index increased 0.01% to 4,916.23, and the Nasdaq Composite added 0.1% to 15,672.82.

    The yield on 2-year Treasury notes increased to 4.33%. 10-year Treasury notes declined to 4.10%, and 30-year Treasury bonds edged down to 4.34%.

    WTI crude oil decreased $0.31 to $77.71 a barrel, and natural gas prices decreased 5 cents to $2.12 a thermal unit.

    Gold increased by $10.93 to $2,029.31 an ounce and extended the previous week's gains after the U.S. dollar drifted slightly lower in international trading.

    The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.63.

     

    U.S. Stock Movers

    Holcim AG increased 3.2% to CHF 66.18 after the Swiss construction material company announced plans to spin off its North American business through a listing in New York.

    The North American operation generated $11 billion in revenue and earnings before interest and taxes of $2 billion in 2023.

    Post-spinoff, Holcim revenue in 2023 is estimated at $17 billion, with $2 billion of free cash flow.

    Holcim North America employs about 16,000 people across 850 sites, and the company plans to generate $20 billion in revenue by 2030.

    Philips NV plunged 6.5% to €19.70 after the Dutch medical device maker said it would halt new sales of sleep machines following a series of recalls.

    Group sales in fiscal year 2023 increased 7% to €18.2 billion in 2023 and advanced 3% to €5.1 billion in the fourth quarter.

    Income from operations swung to a loss of €115 million in 2023 and a profit of €24 million in the fourth quarter, including charges of €363 million connected with the Respironics consent decree.

    The company reached a settlement with the U.S. Food and Drug Administration regarding a mass recall of its Respironics products, including ventilators and breathing devices, in 2021.

    Philips may take as long as five to seven years to meet the regulatory requirements before the company is able to sell new products in the U.S.

    The company is still facing an investigation by the U.S. Department of Justice into how it handled the mass recall and numerous lawsuits from patients claiming their health has suffered due to the use of sleep apnea and breathing devices.

    The medical device maker retained its 85-cent stock dividend for shareholders.

    Philips expects to deliver 3% to 5% comparable sales growth and an adjusted EBITA margin of 11% to 11.5% in 2024.

    Flutter, the parent company of FanDuel is expected to list its stock on the New York Stock Exchange on Monday.

    DraftKings and the company are the two dominant players in online sports betting in the U.S.

    The company will keep its listing on the London Stock Exchange and remain a member of the FTSE 100 index.

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