Stocks are edging lower Tuesday amid a full slate of corporate earnings and two Big Tech updates after the closing bell.
U.S. equity futures edged lower Tuesday as investors looked to a brief pause in Wall Street’s solid October rally amid a parade of blue chip corporate earnings before and after the closing bell.
A steady U.S. dollar, which was marked 0.03% higher in early New York trading at 112.03, and a further easing in Treasury bond yields gave global stocks a modest overnight boost, but with half a dozen S&P 500 earnings before the start of trading, and tech giants Alphabet (GOOGL) – Get Alphabet Inc. Report and Microsoft (MSFT) – Get Microsoft Corporation Report after the bell, investors look to be adopting a cautious tone heading into the opening bell.
Third quarter S&P 500 earnings are expected to rise by around 3.1% from last year, to a collective $458.9 billion, with forecasts for the final three months of the year indicating a growth rate of 4.4% and a collective total of $478.6 billion, according to data from Refinitiv.
Broader economic growth remains a larger question, however, following PMI data for October yesterday that showed business activity contracted for a fourth consecutive month, intensifying concerns that the world’s largest economy is heading into recession.
“From the World Bank, the World Trade Organization, and the World Economic Forum, to the IMF and even Elon Musk, the consensus is growing that the world economy will fall into recession in 2023,” said Nigel Green of London-based financial advisory deVere Group.
“Corporations around the world are tightening their belts and suggesting earnings will be lower, as demand drops, supply chain issues remain, and borrowing gets more expensive as central banks, determined to control inflation, raise interest rates,” he added.
That concern, as well as some dovish signaling from Federal Reserve officials, has lead to a pullback in bond yields, with benchmark 10-year Treasury notes pegged at 4.165% in overnight trading, down from a fifteen year high of 4.375% late last week.
Staying in Treasuries, benchmark 2-year notes were marked at 4.488% ahead of a $42 billion auction in new paper later this morning, with results expected at 1:00 pm Eastern time.
On Wall Street, futures contracts tied to the S&P 500, which is up 5.9% for the month and trading at a five-week high of 3,797.34 points, are indicating a modest 10 point pullback while those linked to the Dow Jones Industrial Average are priced for a 110 point decline. The tech-focused Nasdaq is priced for a 2 point gain thanks in part to the pullback in Treasury bond yields.
Several stocks were on the move in pre-market trading, with shares of Coca-Cola (KO) – Get Coca-Cola Company (The) Report unusually active, rising 2.9% after it posted better-than-expected third quarter earnings, and boosted it full-year sales forecast, as price hikes helped revenues rise firmly ahead of overall volumes.
General Motors (GM) – Get General Motors Company Report jumped 4.5% after reporting stronger-than-expected third quarter earnings and repeating its full-year profit outlook as higher car prices helped fuel record sales for the biggest U.S. automaker.
3M (MMM) – Get 3M Company Report fell 2.5% after it lowered its full-year profit guidance amid a bigger hit from the surging U.S. dollar and weaker respirator sales.
General Electric GE, meanwhile, reversed earlier declines from its third quarter earnings miss as investors looked to the industrial group’s better-than-expected sales and cash flow forecasts.
United Parcel Service (UPS) – Get United Parcel Service Inc. Report surged nearly 5% after it posted stronger-than-expected September earnings, while repeating its full-year profit guidance, thanks to solid gains in the group’s domestic business that offset weakness in supply chain sales.
In overseas markets, better-than-expected tech earnings and political stability with a new Prime Minister in the United Kingdom helped the region-wide Stoxx 600 to an early 0.15% gain in Frankfurt, with a firmer pound holding down the FTSE 100, which was marked 0.6% lower in London.
Overnight in Asia, stocks languished at the lowest levels in two years, following on a from a major sell-off in China stocks yesterday in reaction to Premier Xi Jinping’s third term as President following the
The region-wide MSCI ex-Japan index was marked 0.04% lower heading into the close of trading, while Japan’s Nikkei 225 gained 1.02% amid a modest nudge higher for the yen, which, at 148.90, is still within touching distance of the lowest levels in 32 years.
