Mixed Earnings News May Lead To Choppy Trading On Wall Street

The major U.S. index futures are currently pointing to a roughly flat open on Tuesday, with stocks likely to show a lack of direction after ending the previous session modestly higher.

A mixed reaction to earnings news from several big-name companies may contribute to choppy trading on Wall Street as traders digest the market’s recent run to record highs.

Shares of 3M (MMM) are moving sharply lower in pre-market trading after the conglomerate reported better than expected fourth quarter earnings but provided disappointing first quarter and full-year 2024 guidance.

General Electric (GE) may also move to the downside after reporting fourth quarter earnings that beat estimates but forecasting first quarter earnings below expectations.

Meanwhile, shares of Verizon (VZ) are likely to see initial strength after the telecom giant reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Healthcare giant Johnson & Johnson (JNJ) may also edge higher after reporting better than expected fourth quarter results.

Streaming giant Netflix (NFLX) and chipmaker Texas Instruments (TXN) are among the companies due to report their quarterly results after the close of trading.

Traders may also be reluctant to make significant moves ahead of the release of several key U.S. economic reports in the coming days.

U.S. stocks closed modestly higher on Monday, with the Dow and the S&P 500 reaching new record closing highs. The tech-heavy Nasdaq also reached its best closing level in two years.

The Dow, which climbed to a new high of 38,109.20, settled at 38,001.81, gaining 138.01 points or 0.4 percent. The S&P 500 ended with a gain of 10.62 points or 0.2 percent at 4,850.43 after reaching a high of 4,868.41. The Nasdaq settled at 15,360.29, gaining 49.32 points or 0.3 percent.

Stocks extended the rally seen to close out the previous week amid optimism about the outlook for earnings from major tech firms, with Intel (INTC), IBM Corp. (IBM) and Netflix (NFLX) among the companies due to release their quarterly results this week.

Walt Disney (DIS), United Health (UNH), Caterpillar (CAT), Apple (AAPL), Travelers Companies (TRV) and Goldman Sachs (GS) gained 1 to 2.2 percent.

American Express (AXP), IBM, Amgen (AMGN), Verizon (VZ), Cisco Systems (CSCO), Merck (MRK) and J&J posted modest gains.

Macy’s (M) gained more than 3.5 percent after the department store chain rejected a $5.8 billion takeover bid from Arkhouse Management and Brigade Capital Management.

Home Depot shares (HD) drifted down by about 1.6 percent. Nike (NKE) ended down 1.2 percent. Microsoft (MSFT), JP Morgan Chase (JPM) and Boeing (BA) also ended weak.

On the economic front, reports on durable goods orders, new home sales, fourth quarter GDP, and data on personal income and spending are due this week.

Commodity, Currency Markets

Crude oil futures are sliding $0.67 to $74.09 a barrel after jumping $1.51 to $74.76 a barrel on Monday. Meanwhile, after slipping $7.10 to $2,022.20 an ounce in the previous session, gold futures are inching up $6.70 to $2,208.90 an ounce.

On the currency front, the U.S. dollar is trading at 147.95 yen compared to the 148.10 yen it fetched at the close of New York trading on Monday. Against the euro, the dollar is valued at $1.0869 compared to yesterday’s $1.0883.

Asia

Asian stocks advanced on Tuesday, with continued gains on Wall Street and China stimulus hopes helping underpin investor sentiment.

Gold drifted higher as the dollar slipped ahead of key economic data releases and central bank decisions due this week. Oil prices were slightly higher after climbing about 2 percent on Monday on concerns over tight supply.

Chinese markets recovered from an early slide to end higher after Premier Li Qiang called for more effective measures to stabilize the stock market.

Media reports suggest policymakers are seeking to mobilize about 2 trillion yuan ($278 billion) as part of a stabilization fund to buy shares onshore through the Hong Kong exchange link.

China’s Shanghai Composite Index rose 0.5 percent to 2,770.98, while Hong Kong’s Hang Seng Index jumped 2.6 percent to 15,353.98.

Japanese markets gave up early gains to end marginally lower as the Bank of Japan kept its ultra-easy policy settings intact, as widely expected.

The Nikkei 225 Index soared more than 1 percent to a 34-year peak before ending little changed with a negative bias at 36,517.57.

The broader Topix Index slipped 0.1 percent to 2,542.07 amid profit taking in the tech sector. Advantest and Tokyo Electron fell 1.5 percent and 1.7 percent, respectively.

Seoul stocks gained ground despite data showing a pick-up in producer price inflation in December. The Kospi climbed 0.6 percent to 2,478.61.

Australian markets rose for a third straight session, led by a rally in healthcare stocks. CSL, Ramsay Health Care and Ansell gained 1-2 percent.

The benchmark S&P ASX 200 Index rose 0.5 percent to 7,514.90, while the broader All Ordinaries Index settled 0.5 percent higher at 7,742.10.

Arcadium Lithium surged 4.7 percent as Macquarie initiated coverage on the lithium miner with an outperform rating.

Europe

European stocks are flat to slightly lower on Tuesday as investors await the European Central Bank’s policy meeting due later this week for signals on when the central bank will consider its first interest rate cut.

In economic news, the U.K. budget deficit narrowed in December, figures from the Office for National Statistics showed earlier today.

Public sector net borrowing excluding public sector banks declined 8.4 billion pounds from the last year to 7.8 billion pounds in December. This was the lowest December borrowing since 2019.

While the French CAC 40 Index is down by 0.3 percent, the U.K.’s FTSE 100 Index and the German DAX Index are both just above the unchanged line.

Miners Anglo American, Antofagasta and Glencore have rallied after reports policymakers are considering fresh stimulus measures for China’s economy and stock market.

British pub operator Marston has also moved to the upside after reporting solid holiday sales growth.

Primark-owner Associated British Foods has also climbed after releasing its trading update for the 16 weeks to January 6, 2024.

Meanwhile, Swedish telecom equipment maker Ericsson has dipped after saying it expects challenges in the mobile-network industry to continue this year.

Swatch, the world’s biggest watchmaker, has also fallen after failing to hit the sales record predicted by its chief executive officer.

Computer parts maker Logitech has also slumped after saying it anticipates an annual sales decline of 6 percent-7 percent.

French healthcare firm Sanofi has also slid after it agreed to buy the U.S. biotech Inhibrx Inc. for as much as $2.2 billion.

U.S. Economic Reports

The Treasury Department is scheduled to announce the results of this month’s auction of $60 billion worth of two-year notes.

Stocks In Focus

Shares of United Airlines (UAL) are moving sharply higher in pre-market trading after the airline reported fourth quarter results that exceeded analyst estimates on both the top and bottom lines.

Aerospace and defense company RTX Corp. (RTX) is also likely to see initial strength after reporting better than expected fourth quarter results.

On the other hand, shares of D.R. Horton (DHI) are seeing significant pre-market weakness after the homebuilder reported fiscal first quarter earnings below analyst estimates.

Cryptocurrency exchange operator Coinbase (COIN) may also come under pressure after JPMorgan downgraded its rating on the company’s stock to Underweight from Neutral.