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S&P 500 closes slightly red as weak corporate guidance fuels recession fears

Economy Jan 25, 2023 04:36PM ET
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© Reuters. A trader works on the trading floor at the New York Stock Exchange (NYSE) in New York City, U.S., December 14, 2022. REUTERS/Andrew Kelly
 
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By Stephen Culp

NEW YORK (Reuters) - The S&P 500 ended nominally lower on Wednesday as a string of corporate earnings ran the gamut from downbeat to dismal, reviving worries over the economic impact of the U.S. Federal Reserve's restrictive policy.

All three major U.S. stock indexes pared their losses throughout the afternoon to close well off session lows, with the blue-chip Dow eking out a small gain in the final minutes.

The tech-laden Nasdaq was weighed down after Microsoft Corp (NASDAQ:MSFT), the first major technology firm to post quarterly results, offered dour guidance and raised red flags with respect to its megacap peers which have yet to report.

"We’ve had up and down days, that indicates an ongoing tug-of-war," said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. "The dour guidance good news from the standpoint of what the Fed is doing is working."

"That outcome has become the catalyst for the market one way or the other," Carlson added. "Earnings matter but what’s really got the market’s focus is the Fed interest rate/inflation story."

Fourth-quarter earnings season has shifted into overdrive, with 95 of the companies in the S&P 500 having reported. Of those, 67% have beat consensus estimates, well below the 76% average beat rate over the past four quarters, according to Refintiv.

Analysts now see aggregate S&P 500 earnings dropping 3.0% year-on-year, nearly double the 1.6% drop seen on Jan. 1, per Refinitiv.

The Dow Jones Industrial Average rose 9.88 points, or 0.03%, to 33,743.84, the S&P 500 lost 0.73 points, or 0.02%, to 4,016.22 and the Nasdaq Composite dropped 20.92 points, or 0.18%, to 11,313.36.

Five of the 11 major sectors of the S&P 500 ended lower, with utilities suffering the largest percentage loss.

Abbott Laboratories (NYSE:ABT) dropped 1.4%, as weaker-than-expected medical device sales weighed on the stock.

Among gainers, News Corp (NASDAQ:NWSA) jumped 5.7% after Rupert Murdoch withdrew a proposal to reunite News Corp and Fox Corp.

AT&T Inc (NYSE:T) also delivered disappointing guidance but its renewed focus on its telecoms business helped boost subscriber numbers, sending its shares up 6.6%.

General Dynamics Corp (NYSE:GD) beat quarterly expectations, but a weak 2023 forecast helped send the defense contractor's shares sliding 3.6%.

Shares of Tesla (NASDAQ:TSLA) Inc whipsawed in extended trading after the electric auto maker beat fourth quarter revenue estimates.

IBM (NYSE:IBM) advanced after hours in the wake of posting its highest annual revenue growth in a decade.

Shares of Levi Strauss & Co (NYSE:LEVI) jumped more than 6%in extended trade after the jeans maker provided upbeat 2023 guidance.

Finally, in a post-script to Tuesday's technical glitch which halted the opening auctions for a spate of stocks and prompted a review by the U.S. Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE) said a manual error resulted in the snafu which caused widespread confusion at the opening bell.

Advancing issues outnumbered declining ones on the NYSE by a 1.25-to-1 ratio; on Nasdaq, a 1.13-to-1 ratio favored advancers.

The S&P 500 posted 8 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 61 new highs and 30 new lows.

Volume on U.S. exchanges was 10.89 billion shares, compared with the 10.78 billion average over the last 20 trading days.

S&P 500 closes slightly red as weak corporate guidance fuels recession fears
 

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Comments (13)
Casador Del Oso
Casador Del Oso Jan 25, 2023 4:11PM ET
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What's holding it up? SP500 should be 3000 or less by now. So overvalued...
Hank Williams
Hank Williams Jan 25, 2023 3:33PM ET
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Time for .5 rate hike.
Erikke Evans
Erikke Jan 25, 2023 2:55PM ET
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was was was
Ron Burgundy
Ron Burgundy Jan 25, 2023 2:43PM ET
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Umm the market is going parabolic back up
ferney Restrepo
ferney Restrepo Jan 25, 2023 2:38PM ET
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everytime someone tries to explain what happened in today market, another mysterious thing happened.
Mitchel Pioneer
Mitchel Pioneer Jan 25, 2023 1:49PM ET
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Another miraculous 11AM breaker fire, and the losses magically vanish into thin air.  What's next, a close in the green?  Fraudulent, criminally manipulated JOKE.
First Last
First Last Jan 25, 2023 1:49PM ET
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"losses magically vanish" --  Market is still red.
Dave Jones
Dave Jones Jan 25, 2023 1:49PM ET
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it's probably going to end green....
Ronald Warren
Ronald Warren Jan 25, 2023 1:49PM ET
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Today, the manipulation was in reverse. Algos started selling across the board yesterday at 6:00 pm Eastern. Forced sell-off!! The market is trying to rally, but It's not profitable for the makers if we run away with gains. They got me!! When the DOW went into -400 territory, I had to let the calls go. !@#$%^& again!!
First Last
First Last Jan 25, 2023 1:49PM ET
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Dave Jones  SPX red at close, and further red now.
Stan Smith
Stan Smith Jan 25, 2023 1:48PM ET
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Stocks are creeping back up so bad earning reports are fleeting it seems. I guess its all those retail investors buying the dip...lol
Ronald Warren
Ronald Warren Jan 25, 2023 1:39PM ET
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Anyone have a crystal ball for GDP report?
Matt Kay
Matt Kay Jan 25, 2023 1:39PM ET
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ye, negative as last 6months. except for November cause it had capitalist holiday
First Last
First Last Jan 25, 2023 1:39PM ET
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Matt Kay   US GDP reports are quarterly.
carlos guo
carlos guo Jan 25, 2023 1:03PM ET
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Wait, so massive tech layoffs wasn't bullish and a positive sign for earnings?!?!?!
Robin Hood
RobinHdJr Jan 25, 2023 10:00AM ET
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Short, long, insider trading by the FED is here to stay. The question is what are they doing this year. They were obviously shorting last year. This year they are talking about a soft landing. I guess they are flying aircraft now. So short airlines? Insider trading by anyone else is illegal. The FED does not play by the same rules as us plebes
Luke Knoep
Luke Knoep Jan 25, 2023 10:00AM ET
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You came to the conclusion “short airlines” because you think “they are flying aircraft now.”
First Last
First Last Jan 25, 2023 10:00AM ET
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"obviously shorting last year" --  What evidence made it obvious?
Brad Albright
Brad Albright Jan 25, 2023 10:00AM ET
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@Robin. Modern medicine can do miracles.
 
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