Wall St eyes subdued open after recent rally; earnings in focus
Reuters
Published Jan 23, 2024 22:12
Updated Jan 24, 2024 00:50
By Ankika Biswas and Johann M Cherian
(Reuters) -U.S. main stock indexes were set for a muted open on Tuesday, as investors awaited major triggers that could test the benchmark S&P 500's bull-market run, while GE and Dow-component 3M (NYSE:MMM) slumped on disappointing forecasts.
3M dropped 6.7% before the bell after the industrial conglomerate forecast dour annual earnings, while General Electric (NYSE:GE) shed 3.2% after the engine-maker's bleak quarterly profit forecast.
Halliburton (NYSE:HAL) climbed 1.9% after the oil-services firm posted an upbeat quarterly profit, while aerospace and defense giant RTX jumped 4.2% on a 10% surge in fourth-quarter revenue.
All eyes are on the profit outlook for corporate America after major U.S. banks kicked off the ongoing earnings season, which has been mixed so far, with lower profits.
"A lot of these companies which had a pretty good quarter have issued cautious guidance ... so that weighs on people's minds on whether they should be in this market," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
Of the S&P 500 companies that reported results until Friday, 84.6% surpassed earnings expectations, compared with the 93.1% beat seen in the week prior to that, LSEG data showed.
The benchmark S&P 500 touched a fresh intraday record peak and closed at an all-time high for a second session on Monday, extending a bull-market run, fueled by strength in megacap tech and chip stocks.
The blue-chip Dow also surpassed the 38,000-point mark for the first time on Monday, gaining for the third trading day.
"The market has run out quite a bit and the worry is how much it has factored in rate cuts and how many and is it going to be disappointed once these rate cuts don't come through," Pavlik added.
The personal consumption expenditure (PCE) index - the Fed's preferred inflation gauge - along with the S&P Global (NYSE:SPGI) PMI readings and an advance fourth-quarter GDP print this week will be key in assessing the central bank's next policy decision when it meets on Jan. 31.
Wall Street had lost steam at the start of 2024, struck by a mixed bag of inflation data and Federal Reserve policymakers clamping down on market speculation of interest-rate cuts arriving as early as March this year.
Traders' expectations of U.S. monetary policy easing have now deferred to May, with an 84% odd for an at least 25-basis-point cut, as per the CME Group's (NASDAQ:CME) FedWatch Tool, compared with earlier expectations of March.
At 8:18 a.m. ET, Dow e-minis were down 48 points, or 0.13%, S&P 500 e-minis were up 4 points, or 0.08%, and Nasdaq 100 e-minis were up 34.25 points, or 0.2%.
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Among others, D.R. Horton shed 5.2% as the homebuilder missed estimates for first-quarter profit.
Procter & Gamble cut its annual profit forecast on a fading boost from earlier price hikes and on writing down its Gillette business's value in December. However, its shares were up 1.6%.
United Airlines gained 6.6% following an upbeat full-year outlook, steering a near 3% gain in each of the other airline stocks such as Delta Air Lines (NYSE:DAL), American Airlines (NASDAQ:AAL) Group and Southwest Airlines (NYSE:LUV).
Netflix (NASDAQ:NFLX) rose 1.7% on the streaming pioneer's over $5 billion rights deal to emerge as the exclusive home of World Wrestling Entertainment's Raw from January 2025.
Written By: Reuters
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