Mixed Reaction To Earnings May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday after the Nasdaq and the S&P 500 climbed to new record closing highs in the previous session.

A mixed reaction to the latest earnings news may lead to choppy trading on Wall Street, with several big-name companies also due to report their quarterly results after the close of trading.

Shares of UPS (UPS) are moving sharply higher in pre-market trading after the delivery giant reported first quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Tesla (TSLA) are seeing pre-market weakness even though the electric car maker reported better than expected first quarter results.

Conglomerates General Electric (GE) and 3M (MMM) may also move to the downside despite reporting first quarter earnings that beat expectations.

Google parent Alphabet (GOOGL), Advance Micro Devices (AMD), and Microsoft (MSFT) are among the companies due to report their results after the close of today’s trading.

Traders may also be reluctant to make significant moves ahead of the Federal Reserve’s monetary policy announcement on Wednesday.

With technology stocks helping to lead the way higher, the tech-heavy Nasdaq and the S&P 500 closed in positive territory on Monday. Both indexes reached new record closing highs, although the narrower Dow closed slightly lower.

While the Dow edged down 61.92 points or 0.2 percent to 33,981.57, the Nasdaq advanced 121.97 points or 0.9 percent to 14,138.78 and the S&P 500 rose 7.45 points or 0.2 percent to 4,187.62.

The strength among tech stocks came as traders expressed optimism ahead of the release of quarterly results from a number of big-name companies.

Google parent Alphabet (GOOGL), Microsoft (MSFT), Apple (AAPL), and Amazon (AMZN) are all scheduled to report their quarterly results this week.

Overall buying interest was somewhat subdued, however, as traders looked ahead to the Federal Reserve’s monetary policy announcement on Wednesday.

The Fed is widely expected to maintain its ultra-easy monetary policy, but traders will be paying close attention to any changes to the accompanying statement that may signal a shift in the near future.

In U.S. economic news, a report released by the Commerce Department showed new orders for U.S. manufactured durable goods increased by much less than expected in the month of March.

The Commerce Department said durable goods orders rose by 0.5 percent in March after falling by a revised 0.9 percent in February.

Economists had expected durable goods orders to spike by 2.5 percent compared to the 1.2 percent slump that had been reported for the previous month.

The much weaker than expected durable goods orders growth was partly due to a continued decrease in orders for transportation equipment.

Steel stocks showed a substantial move to the upside on the day, driving the NYSE Arca Steel Index up by 3 percent to its best closing level in nearly ten years.

Considerable strength was also visible among oil service stocks, as reflected by the 2.3 percent jump by the Philadelphia Oil Service Index.

The rally by oil service stocks came despite a decrease by the price of crude oil, with crude for June delivery slipping $0.23 to $61.91 a barrel.

Biotechnology stocks also saw significant strength on the day, resulting in a 1.9 percent advance by the NYSE Arca Biotechnology Index.

Semiconductor, airline and housing stocks also showed notable moves to the upside, while some weakness was visible among tobacco and utilities stocks.

Commodity, Currency Markets

Crude oil futures are climbing $0.54 to $62.45 a barrel after slipping $0.23 to $61.91 barrel on Monday. Meanwhile, after inching up $2.30 to $1,780.10 an ounce in the previous session, gold futures are rising $3.20 to $1,783.30 an ounce.

On the currency front, the U.S. dollar is trading at 108.27 yen compared to the 108.08 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.2080 compared to yesterday’s $1.2086.

Asia

Asian stocks ended flat to slightly lower on Tuesday as climbing Covid-19 cases in emerging economies including India and Brazil dented hopes for a swift global economic recovery.

Traders also awaited the Federal Reserve’s monetary policy announcement and Chairman Jerome Powell’s comments on the economy for directional cues.

Chinese shares ended little changed even as official data showed profits at Chinese industrial firms nearly doubled in March from a year ago.

The benchmark Shanghai Composite Index finished marginally higher at 3,442.61, while Hong Kong’s Hang Seng Index ended down 11.29 points at 28,941.54.

Japanese shares ended lower as a slew of earnings disappointed and the Bank of Japan maintained its monetary stimulus unchanged, as widely expected, after tweaking its policy at the March meeting.

The Nikkei 225 Index dropped 134.34 points, or 0.5 percent, to 28,991.89 as the country struggles with containing the Covid-19 pandemic. The broader Topix closed down 14.60 points, or 0.8 percent, at 1,903.55.

Drug maker Dai-ichi Sankyo tumbled 3.5 percent after issuing a lower than expected forecast for the current year. Canon declined 1.3 percent despite posting significant year-over-year earnings growth for the first quarter.

Australian markets fell but ended well off their day’s lows amid renewed concerns over a surge in coronavirus cases in countries like India, Japan and Brazil.

The benchmark S&P/ASX 200 Index ended down 11.80 points, or 0.2 percent, at 7,033.80, while the broader All Ordinaries Index slipped 12.30 points, or 0.2 percent, to 7,295.50.

BHP Group, Fortescue Metals Group and Rio Tinto all rose about 1 percent as iron ore prices firmed. Gold miner Evolution Mining rallied 3 percent and Northern Star Resources advanced 1.4 percent.

BlueScope Steel gained half a percent as it increased its earnings guidance for the second half. Waste management firm Bingo Industries surged 6.3 percent after it agreed to a A$2.3 billion takeover proposal from Macquarie.

Tabcorp Holdings jumped 4.2 percent as British wagering giant Entain increased its bid for the company’s troubled bookmaking and media division. iSelect climbed 3.3 percent after the insurance comparison platform announced a special dividend.

Seoul stocks ended flat with a negative bias as caution crept in ahead of the FOMC meeting. The benchmark Kospi slipped 2.11 points to settle at 3,215.42 after three days of gains.

Data released earlier in the day showed the country’s GDP grew 1.6 percent sequentially in the first quarter of 2021, beating forecasts for 1 percent growth after a 1.2 percent gain in the previous three months.

Europe

European stocks have struggled for direction on Tuesday as investors digest a barrage of earnings and look ahead to the Federal Reserve’s monetary policy announcement.

Earlier today, the Bank of Japan maintained its massive stimulus and raised its growth forecasts for the world’s third-largest economy, citing expected stronger demand.

Elsewhere, Sweden’s central bank retained its key interest rate and the asset purchase program to support economic recovery and subdued inflation.

While the French CAC 40 Index has edged down by 0.1 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both down by 0.2 percent.

Norwegian energy and aluminum company Norsk Hydro has come under pressure despite posting better than expected earnings.

Lender UBS has also fallen after reporting a surprise $774 million hit from the collapse of U.S. investment fund Archegos.

Whitbread, owner of Premier Inn hotels, has also moved to the downside after it swung to a pretax loss for fiscal 2021.

On the other hand, Sweden’s Evolution Gaming Group has moved sharply higher after its quarterly core earnings jumped 150 percent.

ABB has also risen as the Swiss engineering company unveiled plans to float its electric vehicle charging business.

Energy management group Schneider Electric has also moved to the upside after raising its full-year profit target.

Oil major BP Plc has also moved higher in London after posting better than expected earnings for the first quarter of the year.

HSBC Holdings has also advanced. The global banking giant reported a significantly better than expected 79 percent increase in first quarter profits on the back of an improving economic outlook.

Serco, a company that provides outsourcing services to governments, has also risen after securing a £350 million government jobs contract.

U.S. Economic Reports

Standard & Poor’s is scheduled to release its report on home prices in major metropolitan areas in the month of February at 9 am ET.

At 10 am ET, the Conference Board is due to release its report on consumer confidence in the month of April. The consumer confidence index is expected to rise to 112.0 in April after spiking to 109.7 in March.

The Treasury Department is scheduled to announce the results of this month’s auction of $62 billion worth of seven-year notes at 1 pm ET.

Stocks In Focus

Shares of Crocs (CROX) are moving sharply higher in pre-market trading after the footwear company reported better than expected first quarter results and raised its full-year guidance.

Video game retailer GameStop (GME) is also likely to see initial strength after announcing it has raised approximately $551 million through an equity offering to accelerate its e-commerce transformation.

Meanwhile, shares of Polaris (PII) are seeing notable pre-market weakness even though the recreational vehicle maker reported first quarter results that beat estimates and provided upbeat guidance.

Drug maker Eli Lilly (LLY) may also move to the downside after reporting weaker than expected first quarter results and lowering its full-year earnings forecast.