Daily Markets: Earnings Season Kicks into High Gear; First look at US GDP

The big picture today

Asia-Pacific stock markets continue to have a quiet week as many countries celebrate holidays. In addition to China and Taiwan celebrating Lunar New Year, Australia Day is today and India is celebrating Republic Day, which is also leading to closures in those markets. Japan’s Nikkei fell slightly, losing 0.12%, while South Korea’s KOSPI gained 1.65% and Hong Kong’s Seng rose 2.37% on a broad rally led by the names of electronic technology. By midday, European stock indices are up across the board and US futures are pointing to a positive market open.

Ahead of the market open, another wave of quarterly earnings reports will be released, and market watchers will also get their first look at US GDP for Q4 2022 at 8:30 p.m. ET. The headline figure, which at this point is arguably somewhat retrospective, is expected to slow sequentially, but the report also presents the full quarterly view of one of the Fed’s most closely watched measures of inflation – the price index. personal consumption expenditure (PCE). Following declines in the Consumer Price Index and Producer Price Index during the 4th quarter of 2022, there is a strong chance that both the headline and core PCE data for the quarter will soften. compared to those of Q3 2022. What the market will focus on, however, is the degree of this sequential decline and what it potentially means for what the Fed might say coming out of the monetary policy meeting of next week.

Data download

Domestical economy

In addition to the usual weekly Thursday reports that include initial and continuing unemployment claims and natural gas inventories from the Energy Information Administration, at 8:30 a.m. ET, investors will get their first look at 2024 Q4 GDP. According to consensus, it is slowing to +2.6% YoY, from 3.2% in Q3 2022. Also, at 8:30 a.m. December durable orders data will be released, and then at 10 a.m. ET, new home sales data for December will be released.

Markets

Yesterday, the Dow Jones and S&P 500 were essentially “Unch’d”, or unchanged as the street likes to call it, with results of 0.03% and -0.02%, respectively. The Nasdaq Composite was down 0.18% and the Russell 2000 was up 0.25% on the day. Sectors generally saw similar small moves, except for Utilities (-1.35%) and Financials (0.78%). Utilities fell largely on the 8.71% drop NextEra Energy (NEE) after the company’s lost earnings before interest (expenses), taxes, depreciation and amortization (EBITDA). Attribution-wise, the move was just under 110% of yesterday’s move in utilities.

Here’s how the major market indicators stack up since the start of the year:

• Dow Jones Industrial Average: 1.80%
• S&P 500: 4.60%
• Nasdaq compound: 8.09%
• Russell 2000: 7.33%
• Bitcoin (USD-BTC): 39.36%
• Ether (ETH-USD): 34.74%

Stocks to Watch

Prior to the start of trading for stocks listed in the United States, Alaska Air (ALK), American Airlines (AAL), Comcast (CMCSA), Mastercard (MA), McCormick & Co. (MKC), Nokia (NOK), Northrop Grumman (NOC), Nucor (NUE), Oshkosh (OSK) , and Sherwin Williams (SHW) will be among the companies that will publish their quarterly results.

Results at Tesla (TSLA) beat market expectations for December quarter revenue and EPS, shared that January saw its largest ever orders, and targets 1.8 million cars for 2023 from 1.3 million delivered in 2022. For the December quarter, Tesla produced 439,701 vehicles, up 44%, and delivered 405,278, up 31%, with each vehicle plant producing a record number of vehicles.

Layoffs and weaker-than-expected guidance weighed on shares of the semiconductor capital goods company Lam Research (LRCX) despite beating up and down for its December quarter. For the current quarter, Lam forecasts EPS of $5.75 to $7.25 on revenue of $3.5 billion to $4.1 billion versus consensus guidance of $7.73 EPS and $4.0 billion, respectively. .31 billion in revenue. The company explained its workforce reduction of approximately 7% as follows: “Given the expected decline in wafer manufacturing equipment spending in calendar year 2023, we are taking proactive steps to reduce our costs and increase the efficiency of our global footprint while preserving essential R&D.”

IBM (IBM) announced a mixed December quarter with EPS slightly below expectations, while flat revenue compared to the year-ago quarter slightly exceeded consensus forecasts. By revenue category, enterprise software revenue increased 3% year-over-year, consulting revenue increased 0.5%, and infrastructure revenue increased 2%. For the year ahead, IBM expects steady foreign currency revenue growth in line with its single-digit model and approximately $10.5 billion in consolidated free cash flow, up from more than $1 billion. one year to the next. The company also announced that it would cut 3,900 jobs, or about 1.5% of its workforce.

Early this morning, SAP (SAP) shared, it will lay off 2.5% of its 112,000 global workforce, or about 2,800 employees.

Net results for the quarter from December to Steel Dynamics (STLD) crushed expectations, hitting $4.37 per share against the consensus of $3.64. Revenue for the quarter rose 9.1% year-on-year to $4.83 billion, also beating consensus forecasts. According to the company, “Customer order entry activity continues to be healthy across our businesses…Steel prices have firmed, and our order activity and order books remain strong. We believe that steel consumption in North America will increase in 2023.”

Despite the lack of a consensus EPS forecast for its December quarter, shares of United Rentals (URI) soared in aftermarket trading last night. While some may attribute this to the company’s 18.7% year-over-year revenue growth as well as its leading consensus revenue forecast for the year ahead – 13.70-14.20 billion. dollars compared to the consensus of $13.56 billion – it’s a safe bet that United’s announcement of a first quarter dividend of $1.48 per share had something to do with it. The company also announced plans to relaunch its share buyback program, with plans to repurchase $1 billion worth of shares in 2023.

Shopify (SHOP) Shares soared yesterday after the company published a blog post sharing that for the first time in more than a decade, prices for its basic, midrange and advanced services will be raised. Prices for each plan are expected to increase by around 33% and are expected to begin in April for existing customers.

Dell (DELL) acquired Israeli startup Cloudify for around $100 million to expand its cloud services business.

Dutch and US officials are expected to meet in Washington on Friday to discuss potential new controls on the export of semiconductor manufacturing equipment to China. Reports suggest that a possible deal could be done early next week.

IPOs

The IPO calendar could be a little hotter than in recent weeks with potential prices from Genelux (GNLX), Elate Group (ELGP), MorningStar Partners (TXO) and Syla Technologies (SYT). Readers who want to dig deeper into the schedule of upcoming IPOs should visit Nasdaq’s Latest and Upcoming IPOs page.

After today’s market close

Fair Isaac (FICO), Intel (INTC), KLA Corp. (KLAC) and Visa (V) are among the companies expected to release their latest quarterly results after the shares halted trading today. Those interested in learning more about which companies release their reports when head to the Nasdaq earnings calendar.

on the horizon

Friday January 27

• United States: personal income and expenditure, PCE price index – December
• United States: pending home sales – December
• United States: University of Michigan consumer confidence index (final) – January

Thought of the day

“You don’t have to be awesome to start, but you have to start to be awesome.” – Zig Ziglar

Disclosures

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.