Stocks were little changed, with traders sifting through a batch of earnings reports for clues on the outlook for Corporate America.
(Bloomberg) — Stocks were little changed, with traders sifting through a batch of earnings reports for clues on the outlook for Corporate America.
Just hours away from the start of tech earnings season, a few bellwethers reported their numbers. D.R. Horton Inc., one of the largest US homebuilders, beat quarterly earnings estimates and reported gross margin that came in at the high-end of its guidance. 3M Co., the maker of Post-it notes, forecast profit that trailed estimates and said it plans to cut about 2,500 manufacturing jobs.
After the closing bell, we’ll hear from Microsoft Corp., whose guidance will be especially relevant as some investors had counted on the software giant to be relatively resistant to an economic downturn. Results from another industry giant — Texas Instruments Inc. — could show weakness in the semiconductor sector spreading to new product categories.
Notable Earnings Reports:
- General Electric Co. continues to grapple with lingering issues in its renewable energy business, even as the slimmed-down manufacturer says strong demand for air travel will help boost overall profits this year.
- Johnson & Johnson guided to stronger earnings for 2023 than analysts were expecting after a year in which the pharma division suffered because of waning demand for its unpopular Covid-19 shot.
- Halliburton Co. boosted its dividend 33% as the world’s biggest provider of fracking services follows its oil-and-gas clients by expanding shareholder returns amid tight global supplies for crude.
- D.R. Horton Inc., one of the largest US homebuilders, beat quarterly earnings estimates and reported gross margin that came in at the high-end of the company’s guidance, providing some hope for improvement as the housing industry’s key selling season approaches.
- Verizon Communications Inc.’s profit outlook trailed Wall Street estimates in a sign that the consumer wireless business continues to weigh down performance.
The popping of the bubble in US stocks is far from over and investors shouldn’t get too excited about a strong start to the year for the market, warns Jeremy Grantham, the co-founder and long-term investment strategist of GMO.
“The range of problems is greater than it usually is — maybe as great as I’ve ever seen,” Grantham added.
A strong start to the year for US tech stocks is facing a pair of technical roadblocks.
The recent Nasdaq 100 rally has left the gauge just below the 23.6% Fibonacci retracement of its 2021 record high and September low. That level acted as resistance three different times late last year, with rallies fading just above it each time. Even if it does manage a successful break, it will then face a test of its 200-day moving average, a line it hasn’t traded above in nearly a year.
Multiple shares were briefly halted for volatility on the New York Stock Exchange through the open before resuming trading. NYSE Equities says that “all systems are currently operational.”
On the economic front, US business activity contracted for a seventh month, though at a more moderate pace, while a measure of input prices firmed in a sign of lingering inflationary pressures.
Traders also kept an eye on the latest geopolitical developments.
The Biden administration has confronted China’s government with evidence that suggests some Chinese state-owned companies may be providing assistance for Russia’s war effort in Ukraine, as it tries to ascertain if Beijing is aware of those activities, according to people familiar with the matter.
Key events this week:
- US MBA mortgage applications, Philadelphia Fed non-manufacturing activity, Wednesday
- US fourth-quarter GDP, new home sales, initial jobless claims, Thursday
- US personal income/spending, PCE deflator, University of Michigan consumer sentiment, pending home sales, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 was little changed as of 11:30 a.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average rose 0.1%
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index rose 0.1%
Currencies
- The Bloomberg Dollar Spot Index was little changed
- The euro rose 0.1% to $1.0883
- The British pound fell 0.4% to $1.2335
- The Japanese yen rose 0.6% to 129.90 per dollar
Cryptocurrencies
- Bitcoin fell 0.2% to $22,944.68
- Ether fell 0.6% to $1,621.8
Bonds
- The yield on 10-year Treasuries declined four basis points to 3.47%
- Germany’s 10-year yield declined five basis points to 2.16%
- Britain’s 10-year yield declined eight basis points to 3.28%
Commodities
- West Texas Intermediate crude fell 1.3% to $80.52 a barrel
- Gold futures rose 0.4% to $1,953.50 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Matt Turner, Peyton Forte and Isabelle Lee.
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