Stocks Settle Mixed with Big Tech Earnings and FOMC Meeting on Tap

Rich Asplund - Barchart - Tue Jan 30, 3:43PM CST

What you need to know…

The S&P 500 Index ($SPX) (SPY) on Tuesday closed down -0.06%, the Dow Jones Industrials Index ($DOWI) (DIA) closed up +0.35%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -0.68%.

Stocks on Tuesday settled mixed, with the Dow Jones Industrials posting a new record high but the S&P 500 and Nasdaq 100 indexes closing lower. Tuesday’s U.S economic reports showed strength in the economy that bolstered optimism the Federal Reserve can engineer a soft landing. The markets are awaiting the results of the 2-day FOMC meeting on Wednesday and earnings reports this week from Apple, Alphabet, Amazon.com, and Microsoft.

Corporate news Tuesday was mixed. United Parcel Service closed down more than -7% after forecasting 2024 revenue below consensus. Also, Whirlpool closed down more than -6% after forecasting full-year revenue below consensus. On the positive side, MSCI closed up more than +9% after reporting Q4 adjusted EPS above consensus. Also, General Motors closed up more than +7% after reporting stronger-than-expected Q4 adjusted EPS and forecasting 2024 above-consensus adjusted EPS.

The Federal Reserve is expected to hold monetary policy steady at Wednesday's conclusion of the 2-day FOMC meeting. However, investors will scour Fed Chair Powell's post-FOMC meeting comments for clues on the Fed’s policy outlook.

The markets are discounting the chances for a -25 bp rate cut at 2% at this week’s FOMC meeting and 43% for that same -25 bp rate cut at the following meeting on March 19-20.

The International Monetary Fund (IMF) raised its 2024 global GDP forecast to 3.1% from a 2.9% projection in October.

The U.S. Nov S&P CoreLogic composite-20 home price index rose +5.4% y/y, the largest increase in a year.

The Conference Board U.S. Jan consumer confidence index rose +6.8 to a 2-year high of 114.8, right on expectations.

U.S. Dec JOLTS job openings unexpectedly rose +101,000 to 9.026 million, showing a stronger labor market than expectations of a decline to 8.750 million.

U.S. and European government bond yields on Tuesday were mixed. The 10-year T-note yield fell to a 2-week low of 4.034% but turned higher and finished down -1.5 bp at 4.059%. The 10-year German bund yield fell to a 2-week low of 2.199% but rebounded and finished up +3.3 bp at 2.268%. The 10-year UK gilt yield fell to a 2-week low of 3.849% but rebounded and finished up +2.5 bp at 3.901%.

Eurozone Q4 GDP was revised upward to unchanged q/q and +0.1% y/y from the previously reported -0.1% q/q and +0.1% y/y.

The Eurozone Dec economic confidence indicator fell -0.1 to 96.2, slightly stronger than expectations of 96.1.

Spain's Jan CPI (EU harmonized) unexpectedly strengthened to +3.5% y/y from +3.3% y/y in Dec, stronger than expectations of an easing to +3.0% y/y.

The Japan Dec jobless rate unexpectedly fell -0.1 to an 11-month low of 2.4%, showing a stronger labor market than expectations of no change at 2.5%.

Overseas stock markets on Tuesday settled mixed. The Euro Stoxx 50 closed up +0.50%. China’s Shanghai Composite Index closed down -1.83%. Japan’s Nikkei Stock Index closed up +0.11%.

Today’s stock movers…

United Parcel Service (UPS) closed down more than -7% to lead losers in the S&P 500 after forecasting 2024 revenue of $92.0 billion-$94.5 billion, below the consensus of $95.66 billion.

Oil drilling service stocks are under pressure today after Saudi Aramco, the world’s largest oil company, abandoned plans to boost its output capacity. As a result, Schlumberger (SLB) closed down more than -7%. Also, Baker Hughes (BKR) closed down more than -2% and Halliburton (HAL) closed down more than -1%.

Whirlpool (WHR) closed down more than -6% after forecasting full-year revenue of $16.90 billion, below the consensus of $17.68 billion.

Alexandria Real Estate Equities (ARE) closed down more than -4% after reporting Q4 AFFO/share of $2.28, below the consensus of $2.29.

Johnson Controls International (JCI) closed down more than -3% after cutting its full-year adjusted EPS forecast to $3.60-$3.75 from a prior estimate of $3.65-$3.80.

Warner Bros Discovery (WBD) closed down more than -3% after Huber Research Partners initiated coverage on the stock with an underweight rating and a price target of $9.50.

Advanced Micro Devices (AMD) closed down more than -3% after Raymond James downgraded the stock to outperform from strong buy due to valuation concerns.

Boeing (BA) closed down more than -2% to lead losers in the Dow Jones Industrials after it withdrew a request for a safety exemption that would have helped speed approval of its new 737 Max 7 aircraft.

MSCI Inc (MSCI) closed up more than +9% to lead gainers in the S&P 500 after reporting Q4 adjusted EPS of $3.68, above the consensus of $3.29.

General Motors (GM) closed up more than +7% after reporting Q4 adjusted EPS of $1.24, better than the consensus of $1.16, and forecast 2024 adjusted EPS of $8.50-$9.50, well above the consensus of $7.70.

Sysco Corp (SYY) closed up more than +7% after reporting Q2 adjusted EPS of 89 cents, above the consensus of 88 cents.

Nucor (NUE) closed up more than +6% after reporting Q4 EPS of $3.16, better than the consensus of $2.88.

Corning (GLW) closed up more than +6% after reporting Q4 core sales of $3.27 billion, better than the consensus of $3.26 billion.

HCA Healthcare (HCA) closed up more than +5% after reporting Q4 EPS of $5.93, well above the consensus of $5.01, and forecast 2024 EPS of $19.70-$21.20, stronger than the consensus of $19.52.

Danaher (DHR) closed up more than +4% after reporting Q4 sales of $6.40 billion, stronger than the consensus of $6.02 billion.

Super Micro Computer (SMCI) closed up more than +3% after reporting Q2 net sales of $3.66 billion, stronger than the consensus of $3.42 billion, and raised its full-year revenue forecast to $14.3 billion-$14.7 billion from a previous forecast of $10 billion-$11 billion.

Across the markets…

March 10-year T-notes (ZNH24) on Tuesday closed up +3.5 ticks, and the 10-year T-note yield fell by -1.5 bp to 4.059%. Mar T-notes on Tuesday climbed to a 1-1/2 week high, and the 10-year T-note yield fell to a 2-week low of 4.034%. T-notes moved higher Tuesday on carryover support from Monday when the Treasury unexpectedly cut its Q1 borrowing estimate to $760 billion from an $816 billion estimate in October, which eased supply concerns as the lower borrowing estimate may prompt the Treasury to reduce the sizes of its monthly debt auctions. Also, a decline in inflation expectations was bullish for T-notes after the 10-year breakeven inflation rate fell to a 2-week low Tuesday at 2.256%.

T-note prices gave up their gains mid-morning and turned lower briefly on strength in U.S. economic reports after Dec JOLTS job openings unexpectedly increased and after the Conference Board’s Jan consumer confidence index rose to a 2-year high.

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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.