4:12pm: Dow avoids big losses
The Dow closed Tuesday down 16 points, less than 0.1%, at 33,971, while the Nasdaq Composite fell 4 points to 12,153 and the S&P 500 gained 1 point to 4,152. The small-cap Russell 2000 index slid 9 points, 0.5%, to 1,794.
The indexes managed to eke out a neutral day after starting in a slump. Stocks like Goldman Sachs, which fell 1.7% after disappointing first-quarter results, hurt the DJIA.
“It seems the cost-cutting at Goldman Sachs wasn’t enough to boost performance this time around, but despite the vampire squid’s poor showing earnings season seems to be providing the support stocks have been looking for,” said Chris Beauchamp, chief market analyst at the online trading platform IG.
Earnings season in is full swing this week, with Netflix and United Airlines among those reporting after the bell.
12.05pm: Mixed financial results fail to ease rate hike concerns
US stocks were lower in noon trading as a stronger-than-expected earnings season has sparked investor worries of more interest rate increases.
At midday, the Dow lost 89 points to 33,898, while the S&P 500 eased 7 points at 4,144 and the tech-heavy Nasdaq slipped 29 points to 12,129.
“Today’s mood is about profitability concerns [which] may have been overdone for the quarter, but Fed tightening fears won’t be going away anytime soon,” Oanda senior market analyst Ed Moya said.
“If earnings continue to impress, too much of a good thing will ultimately prove to be inflationary and that will likely mean more Fed tightening,” he added.
Notable movers included shares of Lockheed Martin Corp, which rose more than 2% after the aerospace and defense contractor reported 1Q financial results that surpassed expectations and reaffirmed its full-year guidance.
9:40am: Housing starts slow less than expected
US stocks opened mixed as investors weighed up another round of bank earnings, this time from the Bank of America and Goldman Sachs.
Just after the market opened, the Nasdaq had added 0.6% or 67 points at 12,225 points and the S&P 500 was up 0.3% or 11 points at 4,162 points, while the Dow Jones struggled, down 0.2% or 73 points at 33,913 points.
Meanwhile, new data shows US housing starts in March fell by 0.8% to 1.420 million, above the Street’s expectation of 1.4 million, while building permits fell 8.8% to 1.413 million, below the expected 1.450 million.
The outlook for housing demand, the ultimate driver of residential construction activity, remains grim, commented Pantheon Macroeconomics senior US economist Kieran Clancy.
“The bigger picture here is that residential construction activity merely is stabilizing, after cratering last year,” Clancy said.
“Housing starts across the first quarter fell at a 0.7% annualized rate, significantly slower than the 40% and 14% annualized declines in 3Q and 4Q respectively. A sustained recovery, however, remains a long way off, and total fixed investment still faces a significant drag from the likely sharp drop in capital spending this year.”
9:10am: Goldman Sachs disappoints
On the flipside, Goldman Sachs reported first-quarter revenue Tuesday morning that missed expectations, putting the investment banking firm behind the eight-ball compared it its rivals.
The firm posted revenue of $12.22 billion, 5% lower year-over-year, which fell short of the $12.79 billion expected by analysts. Earnings dropped 18% to $8.79 per share, topping Street expectations of $8.10.
Shares of the New York-based firm tumbled nearly 3.5% to $327.43 in premarket trading.
8:45am: Bank of America beats estimates
Bank of America Corp has reported first-quarter earnings that beat expectations as it benefited from higher interest rates and strong growth in its loan book.
However, like many of its peers, the bank has increased provisions for credit losses due to the deteriorating economic environment.
Revenue net of interest expense for the three months to March 31, 2023, came in 13% up at $26.3 billion, with net interest income rising 25% to $14.4 billion and non-interest income gaining 1% to $11.8 billion from the same quarter in 2022.
Bank of America’s shares traded 2.9% up at $30.37 in pre-market trade.
7:55am: Busy day for blue chips
Wall Street is expected to open higher as investors prepare for a slew of earnings statements from large US corporates, with the quarterly reporting season so far showing that most of those that have reported already have beaten expectations.
Futures for the Dow Jones Industrial Average (DJIA) rose 0.1% in Tuesday pre-market trading while those for the broader S&P 500 index gained 0.4% and contracts for the Nasdaq-100 jumped 0.8%.
The main US benchmarks closed higher on Monday as results continued to come in. The DJIA closed up 0.3% at 33,987, the Nasdaq Composite added 0.3% to 12,158 and the S&P 500 also improved by 0.3% to 4,151.
Data from Bank of America suggests that earnings season is going well so far. Of the companies that reported during the first week, 90% beat EPS estimates, the highest such rate since 2012.
“Whilst there are a couple of heavyweight banks – Goldman Sachs and Bank of America – on the slate for today, interest may well be focused on the likes of J&J and Netflix, both of which fall into that consumer discretionary category,” commented Scope Markets’ James Hughes. “In turn, this means they could act as barometers for the health of the wider economy and as such have the potential to carry significantly more weight.
While economic data is relatively light, Hughes noted that building permits for March are tipped to show a marked decline following February’s spike higher.
“Again this could serve to rattle market sentiment, especially if it’s seen as indicative of broader issues with the real estate market,” he added.