U.S. stocks are trading near their record highs on Tuesday, as investors digest a mixed set of profit reports. The S&P 500 was marginally lower, down 0.1% in morning trading, while the Dow Jones Industrial Average slid 33 points, also 0.1% lower. The Nasdaq composite experienced a 0.2% dip.
Delivery giant UPS saw its shares tumble 8.1% despite reporting stronger-than-expected profits for the latest quarter. However, the company's revenue fell short of Wall Street estimates, and its forecast for full-year revenue in 2024 was weaker than anticipated. Similarly, Whirlpool shares plunged 6% despite posting better-than-expected profits. Analysts noted that Whirlpool's 2024 revenue forecast of $16.9 billion was approximately $1 billion below market expectations.
General Motors, on the other hand, reported better-than-expected profit and revenue, causing its stock to surge 7.3%.
In the bond market, Treasury yields remained relatively stable, recovering from earlier losses after a report revealed that the job market may be stronger than economists anticipated. The data showed that U.S. employers advertised 9 million job openings at the end of December, slightly exceeding expectations and surpassing November's level. Traders were hoping for a slowdown in job openings, aligning with the trend that has propelled the stock market to record heights –- a moderate economic growth rate that curbs inflation without leading to a recession.
The possibility of multiple interest rate cuts by the Federal Reserve this year has excited investors. Such cuts would mark a drastic change from the past two years, during which the Fed consistently raised interest rates. Lower rates could provide a boost to the economy and investment prices. However, analysts do not expect the Fed to announce any rate cuts in the present meeting. Nonetheless, economists and traders are eagerly awaiting hints from the Fed's communication on Wednesday, hoping for a potential rate cut in the next meeting set for March.
The yield on the 10-year Treasury slipped slightly to 4.08% from 4.09% on Monday, but it had been at 4.04% just prior to the release of job opening data and a separate report showing that consumer confidence is surpassing expectations.
After closing bell, two influential stocks, Microsoft and Alphabet, are scheduled to report their quarterly results. As some of the largest stocks in the market by value, their performance can significantly sway the S&P 500 and other indexes. Microsoft has gained approximately 69% over the past year, while Alphabet has surged nearly 58%. Expectations are running high, and they will need to deliver strong results to justify their substantial gains. Moreover, Apple, Amazon, and Meta Platforms, three more of the 'Magnificent Seven' Big Tech stocks, are set to report on Thursday.
So far, companies that have reported better-than-expected profits this earnings season haven't received the usual market response. Analysts speculate that high expectations and already lofty stock prices may be muting the impact of positive earnings surprises. For instance, JetBlue Airways saw its shares decline 2.3% despite reporting a milder loss for the last quarter of 2023 compared to analysts' projections. The airline also provided a cautious outlook for 2024, expecting flat revenue and potential cost pressures outside of fuel.
Across the globe, Chinese markets continue to struggle, with indexes experiencing further declines at the start of the year. Shares of China Evergrande Group, the world's most indebted real estate company, remain suspended from trading after a Hong Kong court ordered the company's liquidation. Other property companies led the decline in Hong Kong, where the Hang Seng index fell 2.3%, while stocks in Shanghai retreated 1.8%. Concerns about the troubled property industry and disappointing growth in the world's second-largest economy have prompted Chinese regulators to intervene in an attempt to stabilize the markets.
Meanwhile, stock markets in Asia are exhibiting mixed performances, while European markets are modestly on the rise.
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