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Nasdaq ends lower ahead of big tech earnings, focus on Fed

Published 01/30/2024, 06:15 AM
Updated 01/30/2024, 07:12 PM
© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., January 29, 2024.  REUTERS/Brendan McDermid/File Photo

By Stephen Culp

NEW YORK (Reuters) -The tech-heavy Nasdaq lost ground on Tuesday as the market awaited a spate of high profile corporate earnings and the Federal Reserve convened for its monetary policy meeting.

The S&P 500 closed nominally lower after touching a new intraday high, while the blue-chip Dow finished higher.

Shares of Alphabet (NASDAQ:GOOGL) Inc and Microsoft Corp (NASDAQ:MSFT) fell in extended trading after the companies released their quarterly earnings reports.

"There's a lot of trepidation over the start of the earnings releases from 'the magnificent seven,'" said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia. "The stocks have done incredibly well and there's a little bit of caution being expressed right now and maybe rightly so."

Economically sensitive sectors such as Dow Transports, chips and small caps underperformed the broader market.

The Labor Department reported an unexpected rise in job openings, hinting that the market remains too solid for the Fed to consider cutting its key policy rate as soon as March.

The Fed is expected to end its policy meeting on Wednesday with a decision to let its key interest rate stand at 5.25%-5.50%. Its accompanying statement and Fed Chair Jerome Powell's subsequent press conference will be parsed for clues on the timing and number of rate cuts this year.

"I'm going to be looking for language that matches the storyline that we hope to see in 2024, that sometime in the second quarter we'll see the beginning of a reduction in rates," Tuz added. "I'm going to be listening for language that confirms that that's the most likely scenario."

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Fourth-quarter reporting season has shifted into overdrive, with announcements so far by 144 of the companies in the S&P 500. Of those, 78% have delivered consensus-beating earnings, according to LSEG.

On aggregate, analysts now expect fourth-quarter earnings growth of 5.5% over last year, up from the 4.7% seen at the beginning of the month, LSEG data showed.

United Parcel Service (NYSE:UPS) slid 8.2% after the package deliverer issued a disappointing annual revenue forecast, weighing on transports.

General Motors (NYSE:GM) jumped 7.8% after the automaker provided an upbeat 2024 earnings forecast, and promised more capital return to shareholders.

Ford Motor (NYSE:F) rose 2.0%.

The S&P 500 declined 0.06% to end at 4,924.97 points. The Nasdaq Composite Index fell 0.76% to 15,509.90 points, while the Dow Jones Industrial Average rose 0.35% to 38,467.31 points.

Six of the 11 S&P 500 sector indexes rose, led by financials, up 1.2%, followed by a 1.01% gain in energy.

Boeing (NYSE:BA) Co shares slid 2.3% ahead of its quarterly earnings report expected before Wednesday's opening bell. Scrutiny into the planemaker is intensifying over its 737 MAX 7 after a mid-air cabin blowout on Jan. 5.

Citigroup and Bank of America rose over 3% following rating upgrades from Morgan Stanley, pushing the S&P 500 banks index up 2.1%.

Johnson Controls (NYSE:JCI) dropped 3.8% after the building products supplier lowered its full-year profit estimate, while MSCI advanced 9.3% after the global index provider posted a higher fourth-quarter profit.

Super Micro Computer (NASDAQ:SMCI) rose 3.5% after the server seller projected stronger-than-expected quarterly sales.

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Advancing issues outnumbered falling ones within the S&P 500 by a 1.2-to-one ratio.

Across the U.S. stock market, declining stocks outnumbered rising ones by a 1.4-to-one ratio.

The S&P 500 posted 80 new highs and no new lows. The Nasdaq recorded 126 new highs and 75 new lows.

Volume on U.S. exchanges was relatively light, with 10.3 billion shares traded, compared to an average of 11.5 billion shares over the previous 20 sessions.

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