4:12pm: Bulls and bears alike try to square earnings season with Fed policy
The Dow ended Friday up 22 points, less than 0.1%, at 33,809, the Nasdaq Composite added 13 points, 0.1%, to 12,072 and the S&P 500 ticked up 4 points, 0.1%, to 4,134. The small-cap Rusell 2000 index was flat at 1,790.
The benchmarks pulled out of the red around midday, but it wasn't enough to keep the Dow from posting a losing week for the first time in a month.
“There’s the continued push-pull of the fact that the economy has been a lot more resilient than many people expected and corporate earnings have held up pretty well, all things considered,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
“You can kind of see the bull and bear case really right there in a nutshell as far as resilient economy with stronger-than-expected corporate earnings versus a very hot, very restrictive monetary policy coming from the Fed,” he added.
12.05pm: McDonald’s and Eli Lilly shares hit new multi-year highs though
US stocks were flat in noon trading as some weaker-than-expected corporate financial results weighed on the indices.
At midday, the Dow lost 23 points to 33,764, while the S&P 500 eased 1 point at 4,129 and the tech-heavy Nasdaq gained 2 points to 12,061.
“So far, earnings season is off to an uneventful start, with many companies meeting already reduced earnings expectations and that helps to explain the lack of movement in the major stock indices over the past few days,” BMO Family Office chief investment officer Carol Schleif said.
Notable movers included shares of Procter & Gamble Company, which rose nearly 4% after the company upped its forecast for 2023 organic sales growth to 6% from 4% to 5% previously.
9:40am: Lackluster open
US stocks were muted at the open on Friday as investors took a breather after a slew of quarterly reports ahead of the start of Big Tech earnings next week.
Just after the market opened, the S&P 500 was flat at 4,131 points, while the Dow Jones had slipped 24 points or 0.1% at 33,762 points and the Nasdaq was down 12 points or 0.1% at 12,045 points.
In terms of major movers, Procter & Gamble shares were trading 4.2% higher after the company raised its full-year outlook and higher prices fuelled a quarterly earnings beat.
Tesla shares were up 0.3% at US$162.46 after the electric vehicle maker’s share price plunged by almost 10% on Thursday, the sell-off sparked by its 1Q results which showed the impact of its vehicle price cuts on margins.
7:55am: All bets off the table
Wall Street is likely to open lower as mixed earnings reports and economic data that increasingly suggest the US is headed for a recession leave investors reluctant to take a position ahead of the weekend.
Futures for the Dow Jones Industrial Average (DJIA) fell 0.1% in Friday pre-market trading, while those for the broader S&P 500 index shed 0.2%, and contracts for the Nasdaq-100 declined 0.4%.
The main US benchmarks ended lower Thursday on weaker-than-expected earnings from Tesla and AT&T, while the Philadelphia Fed manufacturing index dropped to its lowest level since May 2020 and jobless claims continued to rise. The DJIA fell 0.3% to 33,787, while the S&P 500 declined 0.6% to 4,130, and the tech-heavy Nasdaq Composite shed 0.8% to 12,060.
“Mixed company earnings and softening economic data are keeping a lid on sentiment, as investors ponder the timing and depth of a potential recession,” commented Richard Hunter, head of markets at interactive investor. “Disappointing Tesla earnings dragged on a Nasdaq index which has otherwise been the star of the show in US markets this year. Profit margins at the electric vehicle maker are under pressure as car prices have been cut, and a net income decline of over 20% from the previous year sent the shares sharply lower.”
Hunter noted that the lack of concrete forecasts from corporates has been another concern, and a general earnings decline is still expected.
Against extremely low expectations, he said most companies have beaten earnings estimates, although next week will provide another acid test. A whole raft of earnings is expected from the likes of Amazon, Alphabet, Meta, Microsoft, McDonald’s, General Motors, Exxon Mobil and Chevron, Hunter added.