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  • The San Juan Daily Star

Wall Street falls as earnings kicks into high gear


U.S. stock indexes fell on Tuesday after industry bellwethers 3M, Johnson & Johnson, and GE beat expectations for profit but warned of a challenging year ahead.


The fourth-quarter earnings season is keenly watched as companies are expected to feel the full impact of the Federal Reserve’s rate-hike campaign. The central bank is widely expected to raise rates by another quarter of a percentage point next week.


Industrial conglomerate 3M Co fell 5.9%, leading the decliners among Dow components after reporting a fall in quarterly profit.


Verizon Communications Inc dropped 0.4% after forecasting annual profit below estimates, while Johnson & Johnson fell 0.5% as it warned that its medical devices business would be hit in the first half of 2023 due to a surge in COVID-19 cases in China.


General Electric Co fell 1.1% on a disappointing profit forecast for the year, despite topping quarterly earnings estimates.


“The problem today is mainly earnings,” said Fall Ainina, research director at James Investments. “Now many are forecasting a profit recession, which is back-to-back quarters of negative earnings.”


Wall Street’s main indexes started the earnings- and data-heavy week on a strong note amid renewed appetite for growth stocks following a battering last year.


After logging its biggest gain in over two months on Monday, Advanced Micro Devices Inc slipped 2.8% as Bernstein downgraded it to “market-perform” from “outperform”.


The Philadelphia SE Semiconductor index dropped 0.9%to slip from its one-month high.

Big Tech earnings could also determine whether renewed enthusiasm for growth stocks will be sustained.


“In the near-term, the answer seemingly lies with tech earnings ... longer-term, if we do experience a Fed pivot this year, then would anticipate a strong, positive buying impulse for tech,” JPMorgan analysts wrote in a client note.


Microsoft Corp is scheduled to report quarterly earnings after the bell.


Analysts now see fourth-quarter earnings for S&P 500 companies dropping 2.9% year-on-year, nearly twice as much as the 1.6% annual drop seen at the beginning of the year, according to Refinitiv data.


At 10:20 a.m. ET, the Dow Jones Industrial Average was down 107.64 points, or 0.32%, at 33,521.92, the S&P 500 was down 17.28 points, or 0.43%, at 4,002.53, and the Nasdaq Composite was down 38.58 points, or 0.34%, at 11,325.83.


A slew of stocks was briefly halted for trading on the New York Stock Exchange shortly after the market opened on Tuesday.


Data showed U.S. business activity contracted for a seventh straight month in January, but business confidence strengthened as the new year began.


Other major growth stocks also dipped, with Alphabet Inc falling 1.1%. The U.S. Justice Department is poised to sue Google as soon as Tuesday, according to a report, regarding its dominance over the digital advertising market.


Declining issues outnumbered advancers for a 1.75-to-1 ratio on the NYSE and for a 1.48-to-1 ratio on the Nasdaq.


The S&P index recorded 23 new 52-week highs and 10 new lows, while the Nasdaq recorded 28 new highs and 12 new lows.


Advancing issues outnumbered decliners for a 1.17-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.18-to-1 ratio on the Nasdaq.


The S&P index recorded seven new 52-week highs and no new low, while the Nasdaq recorded 46 new highs and six new lows.


Tesla Inc’s shares surged 7.7% after China Merchants Bank International said Tesla’s sales in China in November were boosted by price cuts and incentives offered on its Model 3 and Model Y.


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