September 24, 2023

Brad Marolf

Business & Finance Wonders

Stocks close higher as investors await more earnings results, inflation data

Wall Street’s key benchmarks charged forward Tuesday as investors continued to weigh company earnings against the impending monetary tightening that has eroded enthusiasm for stocks in recent weeks.

The Dow Jones Industrial Average closed up 372.24 points, or 1.06%, while the S&P 500 edged 0.84 higher to end the session in positive territory. The Nasdaq Composite rose 178.79, or 1.28%, buoyed by gains in Big Tech, even as rising bond yields pressured the sector. The 10-year U.S. Treasury note hit 1.95%.

Despite recent volatility, DataTrek Research’s Nicholas Colas and Jessica Rabe point out that the S&P 500 is generating 12.4 percent net profit margins at present, based on data from the 54% of companies that have reported fourth quarter results so far. The figure beats the pre-pandemic peak of 12.0 percent in the third quarter of 2018, even if it falls below Q1-Q3 2021’s range of 12.8-13.1%.

“What we’re seeing from here on is a more sustainable pace of growth,” Principal Global Advisors chief strategist Seema Shah told Yahoo Finance Live. “You’ll still see consumers, which are very resilient backed up by excess savings, supply chain normalizations for a boost of inventories and production, and you have corporate balance sheets which are still very, very strong.”

Mixed fourth quarter results from U.S. tech giants have weighed on investors in recent weeks as they already grapple with a Fed readying to tighten monetary conditions and raise interest rates as soon as next month.

“We, as investors paying attention to what’s going on in these companies, just have to recognize that a lot can change,” JPMorgan Asset Management global market strategist Jack Manley told Yahoo Finance Live. “It’s going to be a difficult time for earnings.”

Stocks had a turbulent last week after a disappointing outlook from Meta Platforms (FB) sent the company cratering in the biggest single-day wipeout in market history, dragging other tech peers down in a broader sell-off before posted a sharp comeback following an earnings beat by Amazon’s (AMZN). Another trove of results lies in store for investors this week from companies including Disney (DIS), Uber (UBER) and Coca-Cola (KO).

“The first few weeks of this year were driven much more by macro concerns — higher interest rates, pricing the Fed, inflation,” Stuart Kaiser, UBS head of equity derivatives research, told Yahoo Finance Live. “Since then, we’ve had a window of opportunity where earnings took over.”

Despite a steep sell-off in Meta, other tech companies reported strong earnings that allowed the market to recover, Kaiser added.

“Now that that’s over – about 70% of S&P companies and 80% of tech companies reported earnings – we do think the focus shifts back to the macro side of the ledger this week,” he said, adding that the European Central Bank and Bank of England are tightening monetary policy along with the Fed and a series of high inflation prints are expected in coming months. “When we put that all together, we don’t think the bumpy ride is over.”

The ​​Consumer Price Index (CPI) will be closely watched on Thursday and is likely to show another multi-decade high print on inflation, a reading that could prompt the Fed to assert the more hawkish stance it has taken on. Economists expect a headline CPI print of 7.3% in January over last year, which would mark the fastest rise since 1982, according to consensus estimates compiled by Bloomberg.

Bank of America said in a note out Monday that more downside in equities is likely — at least according to history.

The S&P 500 year-to-date-correction from early to late January was 9.8% on a daily closing price basis. During the midterm year of a U.S. presidential cycle, corrections on the S&P 500 averaged 20%, BofA technical research strategist Stephen Suttmeier pointed out. In 17 of 21 midterm years, the S&P 500 had corrections greater than 9.8%, 15 years saw corrections of 15% or more, and nine out of 10 experienced corrections of at least 20%.

The index struggles just after a first Fed rate hike but tends to do better for the 5-, 6- and 12-month periods after initial increase, according to Suttmeier. Furthermore, the best part of the presidential cycle follows from the midterm year low through the third year of the term. Bank of America indicated that rallies off the low into year-end can be strong and have an average return of 17.6%.

“U.S. equities tend to struggle just after the first rate hike of a Fed tightening cycle, which could come as early as the March FOMC meeting, but the data suggest buying a dip,” Suttmeier wrote.

4:00 p.m. ET: Stocks end higher as investors continue to weigh corporate results

Here were the main moves in markets as at the end of Tuesday’s session:

  • S&P 500 (^GSPC): +37.61 (+0.84%) to 4,521.48

  • Dow (^DJI): +372.24 (+1.06%) to 35,463.37

  • Nasdaq (^IXIC): +178.79 (+1.28%) to 14,194.46

  • Crude (CL=F): -$1.74 (-1.91%) to $89.58 a barrel

  • Gold (GC=F): +$6.10 (+0.33%) to $1,827.90 per ounce

  • 10-year Treasury (^TNX): +3.8 bps to yield 1.9540%

3:03 p.m. ET: Trading halted on cybersecurity firm Mandiant after reports of Microsoft acquisition

Microsoft Corp. () is weighing the potential purchase of cybersecurity-research and incident response company Mandiant Inc. (), Bloomberg News reported, citing a person familiar with the discussions.

The deliberations may not result in an offer. Mandiant and Microsoft declined to comment.

If pursued, the move to buy Mandiant, with a market value of about $3.7 billion, would bolster Microsoft’s lineup of cybersecurity products.

Shares of Mandiant spiked after news of the deal and trading was subsequently halted due to volatility. Mandiant was up 18.59% to $17.86 per share as of 03:01 p.m. ET. Shares of Microsoft were mostly flat, trading at about $303.17 a piece as of the same time.

11:13 a.m. ET: Stocks turn green after struggling for direction in morning trade

Here were the main moves in markets as of 11:13 a.m. ET:

  • S&P 500 (^GSPC): +19.20 (+0.43%) to 4,503.07

  • Dow (^DJI): +214.36 (+0.61%) to 35,305.49

  • Nasdaq (^IXIC): +99.28 (+0.71%) to 14,114.95

  • Crude (CL=F): -$2.52 (-2.76%) to $88.80 a barrel

  • Gold (GC=F): +$4.50 (+0.25%) to $1,826.30 per ounce

  • 10-year Treasury (^TNX): +4.9 bps to yield 1.9650%

The Dow Jones Industrial Average is displayed on a screen after the close of the day’s trading at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., December 15, 2021. REUTERS/Andrew Kelly

10:23 a.m. ET: Pfizer tumbles after outlook misses forecasts

Pfizer Inc. () fell more than 5% in the morning trade after projecting $54 billion in full-year sales of its COVID-19 vaccine and antiviral pill, a miss on ambitious Wall Street estimates.

Despite raising its forecast for the vaccine by $1 billion to $32 billion, the drugmaker warned that it does not expect final sales for the year to top significantly that figure.

“There is less potential upside to this guidance through the year, compared to the situation we faced in 2021 when the vaccine was newly available and few people had received any doses of the vaccine,” Chief Financial Officer Frank D’Amelio said in post-earnings remarks.

Pfizer was down 5.82% to $50.12 per share as of 10:21 a.m. ET.

9:30 a.m. ET: Stocks struggle for direction after starting week lower

Here were the main moves in markets at the start of Tuesday’s session:

  • S&P 500 (^GSPC): -2.86 (-0.06%) to 4,481.01

  • Dow (^DJI): +106.38 (+0.30%) to 35,197.51

  • Nasdaq (^IXIC): -82.34 (-0.58%) to 14,015.67

  • Crude (CL=F): -$1.21 (-1.33%) to $90.11 a barrel

  • Gold (GC=F): +$0.80 (+0.04%) to $1,822.60 per ounce

  • 10-year Treasury (^TNX): +4.9 bps to yield 1.9650%

9:15 a.m. ET: Aluminum hits highest since 2008

Aluminum prices hit their highest level since 2008, closing in on a record, according to Bloomberg data.

Supply-chain woes have resulted in surging prices on raw materials such as aluminum and copper for consumer items including refrigerators, automobiles, and plumbing systems. The cost to transport aluminum now accounts for 20% of the metal’s total price, while the benchmark price to ship copper in the U.S. is at the highest in data going back to 2003, per Bloomberg.

Contracts on aluminum for April 2022 delivery (ALI=F) were up 3.60% to 3,266.25 per ton as of 9:00 a.m. ET.

“We believe that we’ll see a sharp decline from second quarter on because we see the logistics logjam gradually dissipating,” Jorge Vazquez, managing director focused on the aluminum market at Harbor told Bloomberg News.

7:00 a.m. ET: Contracts tied to S&P 500, Dow, and Nasdaq trade near flatline

Here’s how Wall Street’s key benchmarks fared in pre-market trading Tuesday:

  • S&P 500 futures (ES=F): -5.50 points (-0.12%), to 4,470.25

  • Dow futures (YM=F): +6.00 points (+0.02%), to 34,975.00

  • Nasdaq futures (NQ=F): -28.00 points (-0.19%) to 14,531.75

  • Crude (CL=F): -$1.44 (-1.58%) to $89.88 a barrel

  • Gold (GC=F): -$3.20 (-0.18%) to $1,818.60 per ounce

  • 10-year Treasury (^TNX): -1.4 bps to yield 1.9160%

6:45 a.m. ET: Peloton taps new CEO amid acquisition reports

Peloton Interactive Inc. () is expected to replace its Chief Executive Officer, co-founder John Foley, who will step down and become executive chair, according to a .

The company will appoint Barry McCarthy to serve as its new chief executive. McCarthy was CFO at Spotify (SPOT) before retiring in 2019 and is known on Wall Street as the innovative architect of the company’s 2018 direct listing.

Peloton will also slash 2,800 jobs as it seeks to better align costs with slowing demand for its connected bikes.

The shakeup comes on the following a separate late Friday that said Amazon and Nike have expressed interest in buying Peloton. Shares of the stationary bike manufacturer 20% in trading Monday. The stock is back to trading above the $29 IPO price from 2019.

Shares of Peloton closed up 25.28% to $37.27 a piece on Tuesday.

6:01 p.m. ET Monday: Futures tick higher after closing in the red to start the week

Here were the main moves in markets ahead of overnight trading Monday:

  • S&P 500 futures (ES=F): +7.24 points (+0.16%), to 4,483.00

  • Dow futures (YM=F): +34.00 points (+0.10%), to 35,003.00

  • Nasdaq futures (NQ=F): +35.00 points (+0.24%) to 14,594.75

  • Crude (CL=F): +$0.18 (+0.2-%) to $91.50 a barrel

  • Gold (GC=F): -$0.10 (-0.01%) to $1,821.70 per ounce

  • 10-year Treasury (^TNX): -1.4 bps to yield 1.9160%

A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 18, 2022.  REUTERS/Brendan McDermid

A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 18, 2022. REUTERS/Brendan McDermid

Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc

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