Nasdaq Turns Lower Ahead of Key Tech Earnings, Markets In Europe and Asia Close Higher

Barry Adams
30 Jan, 2024
New York City

Market indexes on Wall Street danced around flatline as investors reviewed the latest batch of quarterly results and looked ahead to the Federal Reserve's monetary policy announcement.

The S&P 500 index and the Nasdaq Composite traded around flatline, and investors reacted to quarterly results from General Motors, UPS, JetBlue, and Whirlpool.

After the close, Alphabet, Microsoft, and AMD are scheduled to announce their results. 

The SP 500 index and the Dow Jones Industrial Average closed at new record highs in the previous session.

The Federal Reserve is set to announce its monetary policy decision at the end of the two-day meeting on Wednesday.

Investors are anticipating that the Federal Reserve will hold rates and are looking forward to the central bank's guidance about the rate path.

The latest Job Openings and Labor Turnover report showed an unexpected increase in job openings, suggesting persistent tight labor market conditions. 

  

U.S. Job Openings Expanded In December

The number of job openings rose by 101,000 in December 2023 from the previous month to 9.026 million, the U.S. Bureau of Labor Statistics reported Tuesday.

Job openings rose to a three-month high, driven by an increase of 239,000 in professional and business services but a decrease of 83,000 in wholesale trade.

Job openings, not evenly distributed, rose in the South by 115,000 and the Northeast by 12,000, but declined in the Midwest by 22,000, and the West by 4,000.

Over the month, the number of hires and total separations were little changed, at 5.6 million and 5.4 million, respectively.

Within separations, quits totaled 3.4 million, and layoffs and discharges were 1.6 million, and both changed little from the previous month.

 

U.S. Indexes and Yields

The S&P 500 index decreased 0.02% to 4,924.33, and the Nasdaq Composite declined 0.7% to 15,522.54.

The yield on 2-year Treasury notes decreased to 4.32%. 10-year Treasury notes declined to 4.07%, and 30-year Treasury bonds edged down to 4.30%.

WTI crude oil decreased $1.22 to $78.04 a barrel, and natural gas prices increased 1 cent to $2.06 a thermal unit.

Gold increased by $3.07 to $2,035.56 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 103.48.

 

U.S. Stock Movers

General Motors jumped 7.5% to $38.03 after the company reported better-than-expected quarterly earnings on flat sales in the fourth quarter.

Sales in the quarter edged slightly lower to $42.98 billion from $43.11 billion, net income edged higher to $2.1 billion from $2.0 billion, and earnings per share rose to $1.59 from $1.39 a year ago.

The company reiterated its commitment to electric vehicles and confirmed that adoption of the advanced vehicle has been slower than anticipated.

Despite the near-term sales challenges, General Motors plans to build a production capacity of one million electric vehicles by 2025.

JetBlue Airways declined 1.1% to $5.44 after the company reported a loss in the latest quarter.

Revenue in the fourth quarter decreased 3.7% to $2.3 billion, net income swung to a loss of $124 million from a profit of $24 million, and diluted earnings per share were $0.31 from 7 cents a year ago.

UPS declined 6.9% to $147.20 after the package delivery company reported mixed quarterly results and the company's outlook fell short of market expectations.

 

European Markets  Close at  New Record Highs 

European market indexes inched higher in record territory as investors digested a fresh batch of corporate results.

The Euro Area barely avoided a technical recession after stalling in the fourth quarter of 2023 as consumer spending remained restrained amid elevated interest rates and high inflation.

Market indexes in Frankfurt and Paris jumped to new record highs, and the benchmark index in London edged higher in Tuesday's trading.

 

The Euro Area Barely Avoids Recession

The Euro Area economy struggled in the final quarter of 2023 after larger member nations showed little growth, the statistical agency Eurostat reported Tuesday.

The eurozone GDP in the December quarter stalled following a 0.1% contraction, narrowly avoiding a technical recession in the currency union.

The economies of Spain expanded by 0.6%, Portugal by 0.8%, Italy by 0.2%, and Belgium by 0.4%.

However, the economy of Spain stalled, and Germany contracted by 0.3%.

In full-year 2023, the eurozone economy expanded by 0.5%, despite the aggressive rate hike campaign and multi-year high inflation.

 

Spain's Inflation Accelerated

Spain's overall inflation unexpectedly accelerated in January, the National Statistics Institute reported Tuesday.

Inflation increased to an annual pace of 3.4% in January from 3.1% in the previous month, driven by a higher rate of electricity.

On a monthly basis, Spain's consumer price index edged up 0.1%.

The core rate of inflation, which excludes food and energy, eased for the sixth month in a row to 3.6% from 3.8% in the previous month and fell to the lowest level since March 2022.

Spain's EU harmonized annual inflation rate edged higher to 3.5% from 3.3% in each of the previous two months.

 

Europe Indexes and Yields

The DAX index increased 0.2% to 16,972.34, the CAC-40 index rose 0.5% to 7,677.47, and the FTSE 100 index inched higher by 0.4% to 7,666.41.

The yield on 10-year German bonds edged down to 2.24%; French bonds inched higher to 2.74%; the UK gilts edged lower to 3.87%; and Italian bonds inched lower to 3.75%.

The euro edged lower to $1.082, the British pound inched higher to $1.268, and the U.S. dollar gained to 86.30 Swiss cents.

Brent crude increased $0.82 to $82.65 a barrel, and the Dutch TTF natural gas increased by €1.22 to €29.39 per MWh.

 

Europe Stock Movers

BBVA increased 4.1% to €8.45 after the Spanish financial services provider posted strong fourth-quarter results and announced a stock repurchase plan of €781 million.

Hapag Lloyd declined 8.4% to €141.70 after the German shipping company's operating earnings declined 92% in the fourth quarter because of a lower freight rate reflecting the normalization of global supply chains from pandemic-era disruptions.

Diageo plc declined 3.5% to 2,749.0 pence after sales in the first half declined and profit fell by more than 10% after demand for expensive spirits eased in Latin America and the Caribbean region.

WPP PLC jumped 1.5% to 792.24 pence after the advertising agency upgraded its medium-term financial targets.

 

Foreign Investors Prefer Japan and India to China, BYD Earnings Soar 

Market indexes in Asia diverged as foreign investors rotated out of stocks in China into Japan and India.

The Nikkei index increased 0.2% to 36,089.38 and advanced for the second day in a row this week following the gains on Wall Street in New York.

The unemployment rate in December eased to 2.4% from 2.5% in the previous two months, and investors are looking ahead to the release of retail sales, industrial production, and consumer confidence data later in the week.

Advanced semiconductor-related stocks were among the leading gainers in Tuesday's trading.

Advantest, Disco, and Renesas Electronics gained between 1% and 3%.

Foreign investors have been increasing their holdings in Japan in the hopes that the revamped individual tax-free savings plan will attract more domestic investors to the stock market after three decades of losses.

Foreign investors added about 384 billion yen worth of Japanese stocks, and domestic retail investors sold 185.5 billion yen of Japanese stocks in the period between January 15 and 19, according to the data available from the Tokyo Stock Exchange.

The Nikkei index is trading at about 15 times the estimated earnings of index-member Japanese companies.

Elsewhere in the region, the KOSPI index in Seoul added 0.1% to 2,504.60, and the ASX 200 index in Sydney advanced 0.3% to 7,600.20.

 

Selling Resumes on Chinese Stock Exchanges

Indexes in mainland China and Hong Kong resumed their slide amid persistent selling by foreign investors and protracted weakness in the property market.

Foreign investors continue to sell China stocks on the worry that the government may not be able to provide sustained reforms and stimulus to support financial markets amid a weakening macroeconomic backdrop and worsening tensions with the U.S.

The weak support from the government and restrained consumer spending growth also stoked fears of weak corporate earnings growth.

China's official estimate of the manufacturing industry is likely to show on Wednesday a contraction for the fourth month in a row in December.

The CSI 300 index in Shanghai declined 1% to 3,270.66, and the Hang Seng index in Hong Kong dropped 2% to 15,762.04.

The Hang Seng index has lost about 7.5% this month, trailing only to the worst start of the year at 10% in 2016.

Market sentiment was dented after BYD, the largest electric vehicle maker in the world, estimated an 86% surge in profit in 2023 but fell short of investor expectations.

BYD fell 5.7% to HK$175.50 and dragged down Li Auto by 1.9% to HK$107.20.

Other leading tech stocks also declined, reflecting weak market sentiment.

Alibaba Group, Tencent, Baidu, and Meituan declined between 2% and 3%.

 

India Stocks In Holding Pattern, Crude Oil Refiners and Exporters Face Houthi Reality

Stocks in Mumbai lacked direction in early trading as investors digested a fresh batch of earnings and looked forward to the release of the interim budget later in the week.

The Sensex and the Nifty indexes traded in a tight range around the flatline after Bajaj Finance reported a strong rise in earnings but fell short of market expectations.

Aditya Birla Sun Life, ITC, NTPC, and Piramal Enterprises met or exceeded investor expectations.

Tensions in the Red Sea continue to dominate crude oil and refined crude products trading as shippers divert cargo away from the troubled waters.

The Yemen-based Houthi group's missile attack in the Red Sea set on fire an oil cargo ship owned by one of the largest commodities trading firms, Trafigura, on Saturday.

Moreover, India's diesel shipments to Europe are facing difficulties because all shipments travel through the Red Sea lanes.

European countries are relying on diesel shipments from India and Saudi Arabia to meet their daily shortfall of 650,000 barrels.

India's diesel exports are taking a hit because of the higher freight costs and longer delivery time to the region, and European customers are switching supplies from the U.S.

At the same time, Middle East suppliers are forced to divert shipments around South Africa to Europe, lengthening delivery times by two weeks and increasing freight costs by at least 50%.

Facing higher shipping costs to Europe, Middle East crude oil suppliers are offering discounts to refiners in India and China.

The largest diesel exporter, Reliance Industries, declined 1.5%, but ONGC, Mangalore Refinery, Hindustan Petroleum, and Bharat Petroleum jumped between 2% and 4%.

The Sensex index decreased 57.84 points to 71,883.73, and the Nifty index rose 22.60 points to 21,760.20.

On the Mumbai stock exchange, 281 stocks traded at their 52-week highs and 9 stocks traded at their 52-week lows.

Bajaj Finance declined 4.4% to ₹6,892.50 after the financial services company reported a surge in quarterly profit and revenue but missed investor expectations.

Net interest income in the December quarter jumped 29% to 7,655 crore, and net profit jumped 22% to 3,639 crore from a year ago, respectively.