Stocks Settle Mixed on Corporate Earnings Results

Rich Asplund - Barchart - Tue Jan 23, 3:33PM CST

What you need to know…

The S&P 500 Index ($SPX) (SPY) on Tuesday closed up +0.29%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.25%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.43%.

Stocks on Tuesday settled mixed. Corporate earnings results moved stock market indexes Tuesday. A rally in airline stocks lifted the broader market after United Airlines Holdings reported stronger-than-expected Q4 adjusted EPS. Also, Verizon Communications closed up more than +6% after forecasting 2024 adjusted EPS above consensus, and RTX Corp closed up more than +5% after reporting Q4 adjusted EPS above consensus.

The Dow Jones Industrials spent the day in negative territory as 3M Co. closed down more than -11% after forecasting 2024 adjusted EPS below consensus. Limiting gains in the overall market was a decline in homebuilders after DR Horton reported weaker-than-expected Q1 EPS. Also, higher T-note yields on Tuesday were negative for stocks.

The U.S. Jan Richmond Fed manufacturing survey current conditions unexpectedly fell -4 to a 3-1/2 year low of -15, weaker than expectations of an increase to -8.

The markets are discounting the chances for a -25 bp rate cut at 3% at the next FOMC meeting on Jan 30-31 and 48% for that same -25 bp rate cut for the following meeting on March 19-20.

U.S. and European government bond yields Tuesday moved higher. The 10-year T-note yield rose +2.9 bp to 4.134%. The 10-year German bund yield rose +6.2 bp to 2.352%. The 10-year UK gilt yield climbed to a 6-week high of 3.994% and finished up +8.2 bp at 3.986%.

The Eurozone Jan consumer confidence index unexpectedly fell -1.0 to -16.1, weaker than expectations of an increase to -14.3.

As expected, the BOJ voted 9-0 to maintain its policy rate at -0.1% and keep the 10-year JGB yield target at about 0%.

The BOJ raised its 2024 GDP forecast to +1.2% from a previous estimate of +1.0% and cut its 2024 core CPI estimate to 2.4% from 3.8%.

BOJ Governor Ueda said certainty in the BOJ's outlook is rising gradually and policy will remain accommodative even if the BOJ ends negative rates.

Overseas stock markets on Tuesday settled mixed. The Euro Stoxx 50 closed down -0.32%. China’s Shanghai Composite Index closed up +0.53%. Japan’s Nikkei Stock Index closed down -0.08%.

Today’s stock movers…

Verizon Communications (VZ) closed up more than +6% to lead gainers in the S&P 500 and Dow Jones Industrials after forecasting 2024 adjusted EPS of $4.50-$4.70, the midpoint above the consensus of $4.58.

Airline stocks rallied Tuesday, led by a +5% jump in United Airlines Holdings (UAL) after it reported Q4 adjusted EPS of $2.00, stronger than the consensus of $1.69. Also, American Air Lines Group (AAL), Delta Air Lines (DAL), and Southwest Airlines (LUV) closed up more than +2%.

RTX Corp (RTX) closed up more than +4% after reporting Q4 adjusted EPS of $1.29, better than the consensus of $1.24.

Procter & Gamble (PG) closed up more than +4% after reporting Q2 core EPS of $1.84, better than the consensus of $1.70.

Brown & Brown (BRO) closed up more than +4% after reporting Q4 revenue of $1.03 billion, above the consensus of $987.6 million.

Paccar (PCAR) closed up more than +3% to lead gainers in the Nasdaq 100 after reporting Q4 adjusted EPS of $2.69, well above the consensus of $2.23.

Globalfoundries (GFS) closed up more than +2% after Cantor Fitzgerald initiated coverage on the stock with a recommendation of overweight and a price target of $70.

Haliburton (HAL) closed up more than +2% after reporting Q4 adjusted EPS of 86 cents, above the consensus of 80 cents, and boosted its quarterly dividend to 17 cents per share from 16 cents per share.

3M Co (MMM) closed down more than -11% to lead losers in the S&P 500 and Dow Jones Industrials after forecasting 2024 adjusted EPS of $9.35-$9.75, below the consensus of $9.81.

Homebuilders were under pressure Tuesday, led by a -9% fall in DR Horton (DHI) after it reported Q1 EPS of $2.82, weaker than the consensus of $2.89. Also, PulteGroup (PHM), Toll Brothers (TOL), Lennar (LEN), and Builders FirstSource (BLDR) closed down more than -4%.

Invesco (IVZ) closed down more than -7% after reporting Q4 net flows unexpectedly fell -$8.3 billion, weaker than expectations of an increase of +$8.78 billion.

Lockheed Martin (LMT) closed down more than -4% after forecasting 2024 EPS of $25.65 to $26.35, well below the consensus of $26.74.

Alkami Technology (ALKT) closed down more than -3% after Goldman Sachs downgraded the stock to neutral from buy.

Johnson & Johnson (JNJ) closed down more than -1% despite reporting better-than-expected Q4 sales and earnings after CFO Wolk said pharma sales will be lower in the second half of the year on declining sales of the psoriasis drug Stelara.

Tractor Supply Co (TSCO) closed down more than -1% after Stephens downgraded the stock to equal weight from overweight.

Across the markets…

March 10-year T-notes (ZNH24) on Tuesday closed down -9 ticks, and the 10-year T-note yield rose by +2.9 bp to 4.134%. Mar T-notes on Tuesday posted moderate losses and were weighed down by negative carryover from losses in foreign government bond markets after 10-year UK gilts fell to a 5-week low and 10-year Japan JGBs fell to a 1-month low. Also, weak demand for the Treasury’s $60 billion 2-year T-note auction weighed on T-note prices as the auction had a bid-to-cover ratio of 2.57, well below the 10-auction average of 2.72.

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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.