Stocks in the Red After Mixed Earnings Releases
What you need to know…
Negative corporate news is causing the decline in stocks. Goldman Sachs is down more than -5%, and Citizens Financial Group is down more than -2% after both companies reported weaker-than-expected Q4 net revenue. Also, Travelers is down more than -5% after reporting weaker-than-expected Q4 core EPS. However, Morgan Stanley is jumping +6% after reporting stronger-than-expected Q4 net revenue. Also, we're seeing gains in mega-cap tech stocks, such as NVIDIA (NVDA) and Tesla.
The 10-year T-note yield is flat. The 10-year German bund yield today fell to a 1-month low of 2.064% after Bloomberg reported that ECB sources said that policymakers are starting to consider a slower pace of interest rate hikes than ECB President Lagarde indicated last month.
Today’s U.S. economic news is negative for stocks after the Jan Empire manufacturing survey general business conditions index unexpectedly fell -21.7 to a 2-1/2 year low of -32.9, weaker than expectations of an increase to -8.6.
Overseas markets today are mixed. The Euro Stoxx 50 index is up +0.25%. The Shanghai Composite Stock index closed down by -0.10%, and Japan’s Nikkei Stock index closed up by +1.23%.
Today’s stock movers…
Goldman Sachs (GS) is down more than -5% to lead losers in the S&P 500 and Dow Jones Industrials after reporting Q4 net revenue of $10.59 billion, below the consensus of $10.70 billion.
Travelers Cos (TRV) is down more than -5% after reporting Q4 core EPS of $3.40, weaker than the consensus of $4.06.
Citizens Financial Group (CFG) is down more than -2% after reporting Q4 revenue of $2.20 billion, below the consensus of $2.22 billion.
Pfizer (PFE) is down more than -2% after Wells Fargo Securities downgraded the stock to equal weight from overweight.
A O Smith (AOS) is down more than -2% after Loop Capital Markets downgraded the stock to hold from buy.
U.S.-listed Chinese stocks are falling today on concern China’s recovery from the pandemic will be uneven as an expected slowdown in the global economy will undercut demand for Chinese exports. JD.com (JD) is down more than -4% to lead lowers in the Nasdaq 100. Also, Baidu (BIDU) is down more than -6%, and Pinduoduo (PDD) is down more than -3%. In addition, NetEase (NTES) and Alibaba Group Holding (BABA) are down more than -1%.
Morgan Stanley (MS) is up more than +6% to lead gainers in the S&P 500 after reporting Q4 net revenue of $12.70 billion, above the consensus of $12.43 billion.
Tesla (TSLA) is up more than +4% to lead gainers in the Nasdaq 100 after Hertz said it will make as many as 25,000 electric vehicles available to Uber drivers in European capital cities by 2025.
Apple (AAPL) is up slightly after it rolled out its first new products of 2023 with new MacBook Pro laptops and a Mac mini desktop.
Church & Dwight (CHD) is up more than +4% after Credit Suisse upgraded the stock to outperform from neutral.
Vertex Pharmaceuticals (VRTX) is up more than +3% after SVB Securities upgraded the stock to outperform from market perform.
Domino’s Pizza (DPZ) is up more than +3% after Gordon Haskett upgraded the stock to buy from hold.
Across the markets…
March 10-year T-notes (ZNH23) today are up +2 ticks, and the 10-year T-note yield is down -0.4 bp at 3.500%. Mar T-notes today recovered from early losses and are slightly higher after German bunds rallied to a 1-month high when Bloomberg reported that ECB sources said that policymakers are starting to consider a slower pace of interest rate hikes than ECB President Lagarde indicated last month.
T-notes this morning initially opened lower after a rally in WTI crude prices today to a 2-week high boosted inflation expectations and weighed on T-notes.
The dollar index (DXY00) today is down by -0.22%. The dollar index today is moderately lower on a disappointing U.S. Jan Empire manufacturing survey of general business conditions. Also, hawkish ECB comments today boosted EUR/USD and weighed on the dollar.
EUR/USD (^EURUSD) today is up by +0.41%. The euro today is climbing on better-than-expected economic news after the German Jan ZEW expectations of economic growth index rose more than expected to an 11-month high. Also, hawkish comments today from ECB Chief Economist Lane and ECB Governing Council member Centeno were bullish for EUR/USD.
Today’s economic news was supportive for EUR/USD after the German Jan ZEW expectations of economic growth rose +40.2 to an 11-month high of 16.9, stronger than expectations of -15.0.
Hawkish ECB comments today were supportive for the euro. ECB Chief Economist Lane said the ECB will have to "raise interest more into restrictive territory" to bring inflation back to target. Also, ECB Governing Council member Centeno said the Eurozone economy is performing better than expected in the face of record inflation and the energy crisis that erupted after Russia attacked Ukraine.
USD/JPY (^USDJPY) today is down by -0.14%. The yen today is moderately higher on short covering ahead of Wednesday’s policy decision by the BOJ. Although expectations are for no change to the BOJ’s ultra-easy monetary policy, the markets will be on guard for any tweaks in policy, such as a widening of the 10-year JGB yield target range. The 10-year JGB bond yield is currently trading at 0.524%, above the BOJ’s upper limit of 0.50%.
Today’s Japanese economic news was bearish for the yen after the Japan Nov tertiary index unexpectedly fell -0.2% m/m, weaker than expectations of +0.1% m/m and the biggest decline in 4 months.
February gold (GCG3) this morning is down -6.8 (-0.35%), and March silver (SIH23) is down -0.252 (-1.03%). Precious metals prices this morning gave up early gains and are moderately lower. Higher T-note yields today are bearish for metals. Also, hawkish ECB comments today that called for additional ECB rate hikes weighed on gold prices. Metals prices today initially moved higher on a weaker dollar and a slide in stocks that boosted the safe-haven demand for precious metals.
More Stock Market News from Barchart
- Morgan Stanley Spikes on Results Making Short Puts Attractive to Income Investors
- Markets Today: Mixed After Weak Earnings Results and Higher Bond Yields
- Option Volatility And Earnings Report For January 17 - 20
- Pre-Market Brief: Stocks Mostly Lower Amid Renewed Recession Fears, Weak China GDP Weighs
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.