Invest in the fundamentals of the business and ignore market noise: Brianne Garder
U.S. stocks slumped after Microsoft Corp. warned about a slowdown in sales, fueling concern that even stalwart of the technology industry is getting hit as the economy cools.
Shares of the software giant tumbled more than 4 per cent, putting the Nasdaq 100 on track for its worst rout in a month. Texas Instruments Inc., one of the world’s largest chipmakers, sank after suffering its first sales decline since 2020 and giving a tepid forecast. After the closing bell, two other bellwethers — Tesla Inc. and International Business Machines Corp. will report their numbers.
Fourth-quarter earnings for tech firms in the S&P 500 are projected to drop 9.2 per cent from the same period a year earlier, the steepest slide since 2016, data compiled by Bloomberg Intelligence show. The speed of the deterioration in sentiment is notable: Three months ago, Wall Street merely saw profits coming in flat.
“If earnings reports continue to be disappointing, it’s going to be very hard to argue that the market can rally further because the negative news has already been priced-in, given that the stock market has rallied quite nicely so far this month,” said Matt Maley, chief market strategist at Miller Tabak.
The U.S. equity benchmark is poised for its best January since 2019 after a rally that was driven by expectations the Federal Reserve will moderate its rate hikes. Still, this year’s rebound comes at a time when the economy is heading for a downturn, which could set the stage for a selloff, according to JPMorgan Chase & Co.’s Marko Kolanovic.
“Fundamentals are deteriorating, and the market has been moving up. So that has to clash at some point,” the bank’s chief global markets strategist told CNBC.
In other corporate news, Boeing Co. reported a surprise loss to end 2022 — its sixth straight money-losing quarter — as higher costs slowed the planemaker’s recovery even though a late flurry of jet deliveries drove a surge in cash. AT&T Inc.’s profit and free cash flow forecast for 2023 missed analyst estimates as the wireless carrier invests in network improvements.
The New York Stock Exchange said a manual error caused wild price swings and trading halts for hundreds of company stocks when the market opened on Tuesday.
The root cause of the issue, which the exchange operator says has been resolved, was tied to the company’s so-called “disaster recovery configuration” at the start of the day. Over 1,300 trades and some 84 stocks were impacted and marked as “aberrant,” NYSE said in an updated statement on its website.
- Earnings for the week include: American Airlines, Blackstone, Comcast, Diageo, Intel, LVMH Moet Hennessy Louis Vuitton, Mastercard, SAP, Southwest Airlines, Visa (Thursday); American Express, Charter Communications, Chevron, HCA Healthcare (Friday)
- U.S. fourth-quarter GDP, new home sales, initial jobless claims, Thursday
- U.S. personal income/spending, PCE deflator, University of Michigan consumer sentiment, pending home sales, Friday
Some of the main moves in markets:
- The S&P 500 fell 1.2 per cent as of 9:52 a.m. New York time
- The Nasdaq 100 fell 1.9 per cent
- The Dow Jones Industrial Average fell 0.7 per cent
- The Stoxx Europe 600 fell 0.6 per cent
- The MSCI World index fell 0.8 per cent
- The Bloomberg Dollar Spot Index fell 0.2 per cent
- The euro was little changed at US$1.0897
- The British pound rose 0.2 per cent to US$1.2359
- The Japanese yen rose 0.3 per cent to 129.73 per dollar
- Bitcoin fell 1.5 per cent to US$22,551.98
- Ether fell 3.2 per cent to US$1,547.07
- The yield on 10-year Treasuries was little changed at 3.45 per cent
- Germany’s 10-year yield declined two basis points to 2.13 per cent
- Britain’s 10-year yield declined four basis points to 3.23 per cent
- West Texas Intermediate crude rose 0.2 per cent to US$80.30 a barrel
- Gold futures fell 0.2 per cent to US$1,949 an ounce