The Dow Jones Industrial Average fell Tuesday as bond yields ticked higher and Wall Street pored through the latest batch of fourth-quarter earnings.
The Dow declined 231.86 points, or 0.62%, to close at 37,361.12. The S&P 500 slipped 0.37% to end at 4,765.98, and the Nasdaq Composite dropped 0.19% to 14,944.35.
Markets were closed on Monday for Martin Luther King Jr. Day.
Boeing shares tumbled about 7.9% after Wells Fargo downgraded the company to equal weight from overweight, amid ongoing troubles with its 737 Max 9 model. Meanwhile, AMD shares jumped 8.3% following upbeat analyst commentary on semiconductor demand. The chipmaker, which is trying to catch Nvidia in the artificial intelligence race, rose to a new 52-week high, and is scheduled to report its quarterly results on Jan. 30.
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The benchmark 10-year Treasury note yield climbed more than 11 basis points to 4.064% after Federal Reserve Governor Christopher Waller indicated in a speech that the central bank may ease monetary policy slower than Wall Street had anticipated.
Several major banks released their quarterly earnings Tuesday morning. Goldman Sachs reported better-than-expected profit and revenue, while Morgan Stanley posted a revenue beat in the fourth quarter. Shares of Goldman Sachs inched up 0.7%, while Morgan Stanley declined more than 4%.
"So far, it seems like the consumer is holding up fairly well. If you look across, the banks that have reported, in general, spending's okay. Credit card balances are up, but [we're] also getting more account growth," said Tom Hainlin, senior investment strategist at U.S. Bank Asset Management.
Money Report
Roughly 30 S&P 500 companies have reported calendar fourth-quarter results thus far. Of those, 78% have beaten earnings expectations, according to FactSet.
Investors are also looking ahead to December retail sales data out Wednesday, which could fuel recessionary fears and concerns about economic growth if U.S. consumer spending sees a cooldown.
Stocks close lower Tuesday
Stocks ended Tuesday's trading session in the red.
The Dow Jones Industrial Average fell around 232 points, or 0.62%. The S&P 500 and Nasdaq Composite declined 0.37% and 0.19%, respectively.
— Hakyung Kim
UBS raises S&P 500 target for 2024
The S&P 500 is in for yet another strong year, according to UBS.
The firm lifted its year-end target on the S&P 500 from 4,850 to 5,150, representing 7.7% upside for the benchmark stock index from Friday's close. The S&P 500 ended last week at 4,783.83.
"Given the Fed's recent pivot, subsequent decline in rate expectations, and above-trend 2024 EPS revisions, we now embrace this upside scenario as our base case," strategist Jonathan Golub wrote in a Tuesday note. "While earnings should drive 2024 returns, falling interest rates should support incrementally higher multiples."
For more on UBS' year-end forecast, including what Golub expects for 2025, read here.
— Pia Singh
Here's what's dragging on the Dow
The Dow led the three major indexes lower in Tuesday's session, dropping nearly 1%.
Boeing was a sizable contributor to that slide, tumbling more than 8%. That marked a continuation of a recent selloff amid ongoing troubles with its 737 Max 9 planes after a door plug blew out during a flight earlier this month.
After the plane maker, Nike and Chevron were the next two worst performers. The former slipped more than 3%, while the latter shed about 2%.
The following members of the blue-chip average slid more than 1% in the session:
To be sure, a handful of names were able to buck the leg down. Disney was the average's best performer with a gain of more than 2%, while Verizon followed with an advance of more than 1.5%.
— Alex Harring
Energy leads Tuesday's sector losses
The energy sector saw the largest decline within the S&P 500 on Tuesday, falling 2.1%, as oil prices fell on a strengthening U.S. Dollar. EQT, APA and EOG Resources all fell around 3.4%.
Financial stocks also dropped amid a series of big bank earnings reports. Morgan Stanley, which posted quarterly results in the morning, tumbled 5.2%. PayPal and T Rowe Price Group declined 4.6% and 3.9%, respectively.
— Hakyung Kim
Oil falls on stronger dollar, interest rate expectations
Oil prices fell Tuesday as the U.S dollar grew stronger after a Federal Reserve official indicated the central bank may not cut rates as aggressively as the market expects.
The West Texas Intermediate futures contract for February dropped 56 cents, or .77%, to trade at $72.12 a barrel. The Brent futures contract for March fell 13 cents, or .17%, to trade at $78.02 a barrel.
The U.S. dollar index rose nearly 1% after Federal Reserve Governor Christopher Waller said interest rates "should be lowered methodically and carefully" when the time is right.
Waller acknowledged the cuts are likely this year as long as inflation does not rebound and stay elevated.
Oil prices rose earlier in the trading session Tuesday as investors monitored mounting Middle East tensions, particularly in the Red Sea.
Oil major Shell has halted transit through the Red Sea amid fears about attacks by Houthi militants on commercial vessels in the waterway, The Wall Street Journal reported.
— Spencer Kimball
S&P 500 typically stalls to start presidential election year before climbing, BofA says
While the S&P 500 has historically performed well in a presidential election year, it can start off weak, according to Bank of America.
The broad index has climbed an average of 7.5% in a presidential election year and has finished higher in three out of every four, according to firm data of relevant years between 1928 and 2020. But there's typically a pause in the first six months before a rally in the second half, said Stephen Suttmeier, a technical research strategist at the bank.
More specifically, he said the market usually sees "lackluster" performance in January through May. That's followed by "much stronger' returns over the rest of the year, which including a summer rally between June and August and a post-election relief rally in November and December.
When looking historically at four-year presidential cycles going back to 1928, the second half of the fourth year has seen the second highest average return. The first half of the third year — which in this case was the start of 2023 — has proven to be the best.
— Alex Harring
Spirit Airlines plunges 50% after DoJ antitrust ruling
A federal judge blocked JetBlue Airways' proposed $3.8 billion purchase of budget carrier Spirit Airlines, sending shares tumbling Tuesday afternoon.
Spirit Airlines fell 50.5%. Meanwhile, JetBlue gained more than 6% on the back of the ruling.
— Hakyung Kim
Restaurant Brands buys biggest Burger King franchisee in the U.S.
Shares of Carrols Restaurant Group, the largest Burger King franchisee in the U.S., rose more than 13% after the company agreed to be bought out by Restaurant Brands International.
Restaurant Brands, Burger King's parent company, will pay about $1 billion in cash for the franchisee. Restaurant Brands shares dipped 3%.
"This will allow us to really focus our attention on accelerating remodels and being thoughtful about how to refranchise this restaurant network into smaller packages," Restaurant Brands CEO Josh Kobza said in a statement.
— Fred Imbert
Microsoft, Nvidia among 16 S&P 500 names reaching fresh highs
"Magnificent 7 stocks" Microsoft and Nvidia were two of the 16 S&P 500 names to reach fresh highs on Tuesday. Shares of Microsoft were trading at levels not seen since March 1986, while shares of Nvidia were at levels not seen since January 1999.
Here are some of the other names that reached all-time highs:
- Palo Alto Networks trading at all-time highs back to its IPO in July, 2012
- Eli Lilly trading at all-time high levels back to 1952 when the company offered its first public shares of stock
- CBOE Holdings trading at all-time high levels back to its IPO in June, 2010
- The TJX Companies trading at all-time highs back to IPO in 1987
- Allstate trading at all-time highs levels back to its IPO in 1993, originally the insurance subsidiary of Sears, Roebuck
— Lisa Kailai Han, Christopher Hayes
Information technology stocks buck S&P 500 slide
Information technology names diverged from the broader market on Tuesday.
The S&P 500 sector inched up 0.1% shortly before 12:30 p.m. ET, the only of the 11 that comprise the broad index trading higher. Meanwhile, the index as a whole slid 0.5%.
Advanced Micro Devices helped pull the sector into positive territory with a rally of more than 7%. Western Digital was the next biggest gain with a 4% advance, followed by Cadence Design Systems at 3% higher.
First Solar and Ansys were among stocks restricting gains for the sector as both tumbled more than 5%. Hewlett Packard and Zebra Technologies were the next biggest losers, with both sliding more than 3%.
The industrial, material and energy sectors weighed on the S&P 500 in the session, with each shedding more than 1%.
— Alex Harring
Stocks making the biggest moves midday
Check out some of the stocks making moves in midday trading.
Apple — Shares slid 1.8% after the company offered discounts on multiple products in China, a highly unusual move for the technology giant. Products on sale include its new iPhone 15 line.
PayPal — Shares of the payment company slid 3.5% following a downgrade from Mizuho to neutral. The bank cited increasing competition, particularly from Apple Pay and Zelle, as a major factor placing downward pressure on the stock.
Boeing — Shares of the aerospace giant slipped roughly 7% following a downgrade to equal weight from Wells Fargo, with the firm citing concerns over Boeing's ongoing troubles with its 737 Max 9 model.
Read the full list here.
— Brian Evans
China ETFs hit 52-week lows
A handful of China ETFs fell on Tuesday to hit fresh 52-week lows as shares of Baidu, Bilibili and JD.com declined more than 3% each.
The iShares China Large-Cap ETF and iShares MSCI China ETF fell more than 2.3% to trade near their lowest levels since November 2022, while the iShares MSCI Hong Kong ETF slumped 2.6% to hit its lowest level since October 2022.
U.S.-listed shares of Alibaba and PDD Holdings fell about 3% each.
— Samantha Subin
Yields spike after Fed Governor Wallace says rate cuts may come slower than expected
The 10-year Treasury yield added nearly 9 basis points Tuesday after Federal Reserve Governor Christopher Waller suggested the central bank may take its time lowering rates.
"As long as inflation doesn't rebound and stay elevated, I believe the [Federal Open Market Committee] will be able to lower the target range for the federal funds rate this year," Waller said in a speech at the Brookings Institution.
"When the time is right to begin lowering rates, I believe it can and should be lowered methodically and carefully," he added. "In many previous cycles ... the cut rates reactively and did so quickly and often by large amounts. This cycle, however, ... I see no reason to move as quickly or cut as rapidly as in the past."
— Hakyung Kim
Boeing continues to slide, down more than 7%
Boeing weighed on the stock market on Tuesday, as shares of the aerospace giant fell more than 7% and was on track for its fifth losing session in six tries.
The decline appears to stem at least in part from the continued fallout from a 737-9 Max plane that lost a door in flight. On Friday, the Federal Aviation Administration announced a plan to increase oversight of the production of that class of plane, which has been grounded by the regulator. On Monday, Boeing said it plans to expand quality inspections on the airplane, Reuters reported.
Wall Street may be losing patience with the company. Wells Fargo downgraded Boeing to equal weight from overweight on Tuesday, warning that the FAA audit could uncover more quality problems for the company.
Boeing planes were also reportedly involved in minor incidents in Chicago and Japan over the weekend, though it is not clear if the manufacturer was at fault in those events.
— Jesse Pound
Canadian Pacific Kansas City railroad to benefit from Red Sea disruptions
The railroad Canadian Pacific Kansas City is poised to benefit from disruptions in the Red Sea that are forcing shipping lines to re-route global trade, according to Redburn Atlantic.
The railroad's land bridge from the Port of Lazaro Cardenas on Mexico's West Coast north through the U.S. provides an attractive alternative for freight from Asia to the East Coast.
Container shipping through the Red Sea and Suez Canal has plummeted as Iran-allied Houthi militants in Yemen attack commercial vessels in the waterway.
Shipping lines that are moving cargo from Asia to the U.S. East Coast can re-route trade around the Cape of Good Hope in Africa or through the Panama Canal. The Cape of Good Hope route adds significant delays, and the Panama Canal is restricting transit due to a drought.
"As a result, this should drive additional traffic to use the 'land bridge' that CPKC offers from the Port of Lazaro Cardenas to the east coast," analyst Oliver Holmes told clients.
— Spencer Kimball
Morgan Stanley leads bank stocks lower
Morgan Stanley slid 4% Tuesday after its quarterly earnings report, leading bank stocks lower. The SPDR S&P Bank ETF (KBE), which tracks more than 90 financial institutions, fell 1.3%.
The New York-based bank reported fourth-quarter revenue that surpassed expectations, but its results were hit by regulatory charges and its new CEO Ted Pick issued warnings about geopolitical risks and the U.S. economy.
JPMorgan Chase, Bank of America, Citigroup and Wells Fargo, which each posted results that were marred by a litany of one-time items last week, all traded in the red Tuesday.
Goldman Sachs bucked the down trend with shares rising more than 1%. The bank posted fourth-quarter results that topped analysts' expectations on better-than-expected asset and wealth management revenue.
— Yun Li
Apple stock slides, adds to loss from the start of 2024
Apple stock dipped more than 2% on Tuesday, adding to the tech giant's sluggish performance so far in 2024.
Shares of the iPhone maker have pulled back nearly 6% from the start of the year. Apple's lackluster recent lackluster performance is in stark contrast to a strong 2023, which saw the stock climb roughly 48%.
The stock has been under added pressure since being downgraded by both Piper Sandler and Barclays earlier in January. Both firms cited concern over the company's sales growth moving forward.
— Brian Evans
Stocks fall Tuesday morning
U.S. stocks opened lower Tuesday morning.
The Dow Jones Industrial Average slipped 108 points, or 0.3%. The S&P 500 and Nasdaq Composite both shed 0.3%.
— Hakyung Kim
Stocks making the biggest moves premarket
Check out the companies making headlines before the bell:
- Goldman Sachs — Goldman Sachs shares rose 1.3% after the Wall Street firm reported $11.32 billion in revenue, topping the LSEG consensus estimate of $10.80 billion. Earnings per share came in at $5.48, but it was not immediately clear if that was comparable to the $3.51 per share estimate.
- Morgan Stanley — Morgan Stanley shares dropped 0.3% even after the bank reported revenue of $12.90 billion, better than the $12.75 billion expected by analysts polled by LSEG. The company reported 85 cents earnings per share, though it was not clear if that was comparable to the $1.01 consensus estimate.
- Tesla — Tesla shares slid 1.5% after CEO Elon Musk said Monday that he wants about 25% voting power over his electric vehicle business. He currently owns about 13% of Tesla.
— Sarah Min
New York Fed manufacturing survey hits lowest since May 2020
Manufacturing activity in the New York region collapsed to its lowest level since the early days of the Covid pandemic, the New York Federal Reserve reported Tuesday.
The Empire State Manufacturing Survey registered a reading of -43.7 for the month, its worst level since May 2020 amid a tumble in new orders and shipments. That reading was down from -14.5 in December and well below the -4 estimate from Dow Jones.
New orders plunged 38.1 points to a reading of -49.4. Similarly, shipments were off 24.9 points for a reading of 31.3. Inflation also showed some signs of re-emerging, with the prices paid gauge rising to 23.2, a 6.5-point gain. However, prices received fell to 9.5, a decline of 2 points.
To be sure, there was some good news out of the Empire survey, particularly in the six-month outlook portion. Expectations for general business expectations, new orders and shipments all improved from December.
—Jeff Cox
Dollar index touches highest level in around a month
The dollar index reached its most expensive level in about one month on Tuesday morning.
The index traded at $103.309 at one point, marking its highest level since moving as high as $104.031 on Dec. 13.
It also briefly surpassed its 50-day moving average level of $103.229, something not seen intraday since Nov. 13. The index has not finished a trading day above its 50-day average since Nov. 10.
Notably, the dollar notched highs against the yen and yuan offshore going back to Dec. 7 and Nov. 20, respectively. On the other hand, the U.S. greenback hits its lowest against the euro back to Dec. 14.
— Alex Harring, Gina Francolla
Morgan Stanley rises after earnings report
Shares of Morgan Stanley were up more than 1% in the premarket after the investment bank posted its fourth-quarter results.
The bank earned 85 cents per share on revenue of $12.9 billion. Analysts expected a profit of $1.01 per share, but it wasn't clear if that estimate was comparable to the results. For revenue, the Street was looking for $12.7 billion.
— Fred Imbert
Goldman Sachs beats earnings expectations
Goldman Sachs reported fourth-quarter earnings and revenue that beat analyst expectations thanks to a strong performance from the bank's asset management results.
The bank earned $5.48 per share on revenue of $11.32 billion. Analysts polled by LSEG expected a profit of $3.51 per share, but it wasn't clear if that estimate was comparable. For revenue, analysts had an average forecast of $10.8 billion.
Shares were up more than 1% in the premarket.
— Fred Imbert
ECB officials reiterate data-driven approach to policy
Officials at the European Central Bank reiterated that any changes to monetary policy will be dependent on how much — and how quickly — inflation in the region is improving.
"It's too early to declare victory … the job is not yet done. That said, interest rate tightening has been quite successful so far, more successful than we thought even at Davos one year ago," ECB member Francois Villeroy de Galhau said at the World Economic Forum in Davos, Switzerland.
Fellow ECB member Mario Centeno, meanwhile, noted: "We remain data dependent, that's how we frame our decisions ... One of the greatest successes of the ECB lately is being able to anchor expectations for inflation in the medium term at 2%, and this is because we are credible, we have to remain so."
— Fred Imbert
Tesla dips in pre-market trade after Musk vote takeover comments
Shares of Tesla shed 2.3% in pre-market trade, after company CEO Elon Musk on Monday said he wants to assume roughly 25% of voting control over his electric vehicle business.
He already owns 13% of the Tesla, amounting to 411 million shares.
The billionaire sold tens of thousands of billions worth of his shares in the company in 2022, largely in a bid to finance his $44 billion leveraged takeover of social media platform Twitter.
Concerns have mounted over Musk's divisive public comments and splintered leadership focus, as he simultaneously heads SpaceX.
— Ruxandra Iordache
China consumers more likely to save than spend in first half of 2024, StanChart says
China has been battling weak domestic demand, and the country has pledged to boost consumption at home.
"Domestic consumer confidence is soft because of the softer labor market and softer incomes," Eric Robertsen, global head of research at Standard Chartered Bank, told CNBC's Street Signs Asia.
Due to the softer income levels, Robertsen argued that even with China's interest rates below 3% and more liquidity in the market, "the Chinese consumer will be inclined more to save than to spend, which will be watched in the first half of the year."
He said more fiscal and monetary stimulus is expected.
Mainland China's CSI 300 index shed 11.4% last year, clocking their third straight year in the red. The index was down 0.4% in afternoon trading on Tuesday.
— Shreyashi Sanyal
Commodity miners weigh down Australian markets as ASX200 hits four week low
Australia's S&P/ASX 200 hit four-week lows Tuesday, dragged by commodity stocks as underlying prices slipped. The index also led losses in the region, falling 1.2%, and hitting its lowest level since Dec. 14.
Iron ore prices fell after China's central back held its medium-term lending facility rate at 2.5% on Monday. China is the world's top consumer of iron ore.
The benchmark February iron ore contract on the Singapore Exchange traded at $127.9 a ton, hitting its lowest level since Dec. 5.
Fortescue lead losses among heavyweight miners on the ASX, losing 2.31%. Counterparts Rio Tinto and BHP Group dipped 1.83% and 1.46%, respectively.
— Lim Hui Jie
Japan producer prices climb 0.3% in December
Japan's corporate goods price index rose 0.3% month-on-month in December, beating expectations of economists polled by Reuters.
The Reuters poll estimated December CGPI to remain unchanged from November.
The CGPI remained flat in December compared with the same period a year earlier, compared with Reuters expectations of a 0.3% fall.
— Lim Hui Jie
Uber decides to shutter alcohol delivery service Drizly
Uber has decided to shut down alcohol delivery service Drizly, which it bought three years ago for $1.1 billion, Axios reported on Monday.
"After three years of Drizly operating independently within the Uber family, we've decided to close the business and focus on our core Uber Eats strategy of helping consumers get almost anything—from food to groceries to alcohol—all on a single app," Uber's SVP of delivery Pierre-Dimitri Gore-Coty told Axios.
Drizly, which grew to become the nation's largest online marketplace for alcohol during the pandemic-fueled home delivery sales boom, will officially shut down at the end of March 2024, Uber said.
Shares of Uber, which soared last year, are up more than 2.5% this year. The ride-hailing company joined the S&P 500 on Dec. 18.
— Pia Singh
NYSE chairman sees ‘robust’ pipeline of potential IPOs this year
Initial public offering activity should bounce back in 2024, according to New York Stock Exchange vice chairman John Tuttle.
"We have a robust pipeline from across sectors and geographies," Tuttle said at the Reuters Global Markets Forum ahead of the World Economic Forum's annual meeting in Davos. "It's just finding that time when investors have the appetite for these companies, and companies are ready to go."
Tuttle said the pickup in IPO activity can be attributed to greater stability in U.S. interest rates, record-high equity indexes and fairly low market volatility. IPO activity reached its lowest level in 2023, after 2016, due to interest rate hikes and broader economic uncertainty.
Read the full story here from Reuters.
— Pia Singh
Stock futures open in the red
S&P 500 futures declined 0.1% at the open, while futures tied to the Dow Jones Industrial Average lost 32 points, or 0.08%. Nasdaq 100 futures shed less than 0.1%.
— Pia Singh
